CEE REPORT FLIPPING PAGES.pdf

to purchase the land under the lease restructure program at a discount to the openmarket.

signi%cantly below those in other European countries. Even when accounting for minor di#erences in productivity there is no justi%able reason for land in MecklenburgVorpommern in NE Germany to be worth €25,000-30,000/ha and similar land in Pomorskie, 500km to the east to be worth €7,000-10,000/ha. Parity in values is unlikely but there is scope for further convergence.

Opportunities still exist to purchase companies with ANR leases, which are subject to restructure. The cap of 500 ha that can be purchased by an individual company and the requirement that a company buying land has majority Polish ownership create some complications but purchase of leased land using pre-emption rights presents a good opportunity. The foreign ownership restriction will be removed in May 2016.

Poland - Historic ANR and open market land sale values and ANR lease rates

There has been signi%cant appreciation in freehold land prices since the end of communist rule in 1989. Values however are still at levels

4 $QG KRZGRHV Romania compare?

companies currently own around 8.5%of Romanian farmland. There has been substantial appreciation in value in Romania in the last 10 years, with annualised capital growth in excess of 35%between 2002 and 2012. Land values range fromEuro 2,400 – 4,000/ha for individual plots but where contiguous land plots have been amalgamated to create larger blocks there is a signi%cant uplift in value, which is independent of the general land value trend. Blocks of land in excess of 20 ha invariably are twice the value of individual plots which could be as small as 0.5 ha. Good opportunities for investment exist in Romania and Poland. Patience in %nding the right opportunity is paramount and in acquisition rigour and a robust due diligence process is essential in these emerging markets that do not yet have the same level of sophistication as Western Europe.

Whilst not considered such a stable place to do business as Poland, Romania is starting to make progress in reducing corruption in government and strengthening the rule of law. Romania was ranked 69th out of 177 countries in the world surveyed in 2013 for Transparency International’s Corruption Perception Index, having ranked 70th in 2008. The IMF predict total GDP growth in 2014 and 2015 respectively of 2.4% and 2.5%. There is no restriction on foreign ownership of land in Romania. Foreign investors are entitled to establish wholly foreign-owned companies in which they can acquire land. In the majority of instances, the absence of complete cadastral information and the land book (land registry) have slowed acquisition. This has occured following the restitution process and more recently the pre-emption law changes, but it is estimated that foreign individuals and

CEE Land Market Brief 2014 11