Why to buy Land in Romania?
Foreigners Buying Agricultural Land Romania
Investors' interest to invest in Agriculture has noted visible growth in this sector over the last few years. Since demand for food and other agricultural products is expected to increase in the near future, investors anticipate high-profits from the exploitation of the agricultural sector. In the context of spurring worldwide interest in agriculture, Romania is one of the best countries preferred by international foreign investors seeking to buy land in Romania.
Romania holds an important share of the European crop land due to its grain production. Geographically, the country is well placed within export routes. Romania's climate is also suitable for a wide range of agricultural investments.
Despite all favorable conditions, Romania's agricultural sector can be considered unexplored with poorly equipped companies; therefore foreign investment has the premises to have a high impact on the country's agricultural development.
Exchange of land, including land purchasing by foreigners improves productivity, technology and enhances access to capital, hence stimulating economy development. Based on these principles EU regulations request a single free market with respect to land. Romania has requested a transitional period during which the existing provisions of legislation are still in effect until 2013. Therefore foreign investors are prohibited from purchasing agricultural lands in Romania until 31st December 2013. The most common method to make Romanian land investments is by setting up a legal entity such as a limited liability company, registered in Romania. After 31st December 2013, a term unlikely to be extended, foreign investors will be able to purchase agricultural lands in their own name.
Romanian Land Investments after 2013
After December 2013 EU-residents as well as non-EU residents will be able to freely buy land in Romania. The procedure may vary depending on the different regulations that will be adopted in the future, however the process will probably have a simple framework. The best alternative that you have is to opt for a due diligence analysis conducted by a professional lawyer.
This includes verification of the property's Title Deeds, Land Survey documents and obtaining an extract from the Romanian Land Registry. After completing this very important step, a pre-agreement should be drafted binding both parties to the sale, ensuring the property has been checked. After this procedure a 10-20% deposit should be made; however this step may vary from case to case. Completing the sale requires both parties to be present (or duly appointed representatives), as well as a notary that will collect the relevant state taxes on transaction in addition to his/her fees. Signing the contract and registering the transaction in the Land Registry completes the sale.
The acquisition of agricultural land Romania by foreign investors is expected to boom after the end of the land purchase embargo due to the profitable premises of doing business in this sector. The acquisition process may vary from case to case, depending on many factors that might influence the sale process. However the frameworks of the whole process are straight forward, implying a relatively fast way to build success in the agricultural business.
Invest in agricultural lands in Romania
We are more and more people and our planet's resources are increasingly scarce. We've all heard about the increase in food prices, but maybe this can be a good thing for overall global food production because they can stimulate investments in the agricultural sector. When population and food prices are increasing on the domestic market, investments in land are the safest long term. Investors and land analysts recommended buying land for those who want a profit over time.
Romania has substantial agricultural resources, with an agricultural area of 14.7 million hectares (or 61.7% of total territory) according to statistics from 2009. The distribution by land use shows that arable area is about 64% of the agricultural land, one third, 4.8 million ha is occupied by pastures and meadows and orchards and vineyards and is approx. 3%. Romania is located on the 6th place in Europe as an agricultural area used (after France, Spain, Germany, Britain and Poland) and on the 5th place as arable land (after France, Spain, Germany and Poland). Currently there is no clear statistics on uncultivated land surface but are estimated to be between 1 and 2 million hectares of land growing weeds. Nowadays, Romanian authorities are trying to approve a law so that uncultivated agricultural land owners will not receive subsidies from the state or to be forced to pay penalties or higher taxes. In this way, Romanian authorities' intention to introduce a tax on uncultivated land plots will oblige owners to work, rent, lease their land or will boost land plot sales, will further facilitate the acquisition of more fertile areas.
Why invest in Romania?
Low prices for land acquisitions are an incentive for potential buyers and investors, since the agricultural land price in Romania is up to five times lower than in other European countries. Our country offers 1500-4000e/ha farmland, one of the best deals worldwide. Only a few areas of the world can compete in terms of price and quality of local soils. The acquisition of large areas of farmland seems to become an important concern for food security in countries with growing populations, like China, India or South Korea but also for the cash-rich but poor in arable land, as Persian Gulf states. Taking into consideration these advantages and money-hunger of the peasants, various investment funds buy, in this period, large areas of agricultural land more or less merged and different fertility. They have already bought lots of acres and hundreds of thousands of acres have been leased, especially in the west and south east of the country. Thanks to EU funds that benefit Romania, fertile land and low agricultural competitiveness, investment in this area is a very profitable business opportunity.
Romania has the natural resources to feed a population four or five times greater than the 22 million citizens, but in 2008 imported $ 6.1 billion food.
If you acquire a land with a very good soil and high fertility, you should not have to worry about the not cultivated land plots, because for example, in areas that are of interest for cereal, the investor who buys land here will have 100% of the land worked through local farmers who are interested in renting a land.
Not all plot lands are fertile and suitable for obtaining food, so Romanian citizens and investors can opt for energetic cultures to produce biomass, without entering into competition with agriculture for food. Investors can acquires such plots at a much lower price and invest in energetic culture to obtain higher returns and in the same time be ecological. By setting up these types of crops that are planted only once and are operated annually you protect the forest, no longer being needed for irrational cutting firewood. In terms of financial efficiency, this type of culture, according to the calculation of gross margin results, is one of the highest in the agriculture industry.
In the recent years, foreign companies invest in Romania in agriculture. Decades of low exploitation of the soil, the superior soil quality, funding granted by the Romanian and European Union plus a favorable world situation for agriculture and animal husbandry have made Romania to become an the best open door to agricultural investment.
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