For those wondering, “should I invest in agriculture land?” or “is it good to invest in agricultural land?” —Ukraine presents a compelling case. The ongoing land reforms, rising land values, and potential for high agricultural productivity make it an attractive option for investors looking for farm land for sale in Ukraine.
With Ukraine’s gradual move toward EU integration, further liberalization of the farmland market is expected. This could open up more opportunities for foreign investors to buy agricultural land in Ukraine and benefit from the country’s vast agricultural potential.
The Evolution of Ukraine’s Farmland Market: Opportunities and Challenges
Ukraine’s agricultural land market remains heavily regulated, restricting demand by excluding companies, foreign investors, and large-scale transactions. These limitations, coupled with geopolitical uncertainty, contribute to significant underpricing of Ukrainian farmland compared to its EU neighbors. As a result, land prices in Ukraine remain far below those in bordering EU countries.
For instance, farmland prices in Ukraine’s neighboring EU countries have been rising steadily over the past decade. In Hungary, agricultural land prices increased by approximately 65% between 2013 and 2021. By 2021, Hungarian farmland was valued at nearly three times the price of comparable land in Ukraine. This trend suggests that Ukraine’s strict market regulations suppress both land values and transaction volumes. Lifting these restrictions—even amid ongoing uncertainty—could unlock the market’s true potential.
Currently, Ukraine is undergoing significant economic and legal transformations, even amid wartime challenges. One of the most critical reforms is the phased opening of its farmland sales market, which began in July 2021 and entered its second phase on January 1, 2024. This reform has vast implications for the agricultural sector, foreign investment, and the broader economy.
Current State of Ukraine’s Farmland Market
Ukraine boasts 42.7 million hectares of agricultural land, including occupied territories, making up about 71% of its total area. This includes 33 million hectares of arable land, far surpassing major European countries such as France (18 million ha), Germany (12 million ha), and Poland (11 million ha). Ukraine also holds one-third of the world’s black soil reserves, positioning it as a crucial player in global food security.
Since the land sales market opened in 2021, the number of transactions has steadily increased. By the end of 2023, a total of 195,929 sales transactions had been completed, covering 432,200 hectares—about 1.25% of Ukraine-controlled farmland. The farmland for sale market’s liquidity is expected to grow significantly with the inclusion of legal entities in 2024.
Farmland Market Liberalization: A Two-Phase Approach
Ukraine’s farmland sales market reform was designed in two stages:
- Phase 1 (July 2021 – December 2023): Land sales were permitted only to individuals with a maximum ownership cap of 100 hectares per person. Foreigners and legal entities were excluded, and state or communal farmland remained under a sales ban. The purchase price had to meet or exceed the normative monetary land value, ensuring price stability.
- Phase 2 (From January 2024): Legal entities registered in Ukraine are now allowed to buy farmland in Ukraine, and the ownership cap per beneficiary has increased to 10,000 hectares. However, the ban on foreign ownership remains in place until a national referendum decides otherwise.
Price Trends and Market Dynamics
Despite the presence of a formal land market, estimating the true value of Ukrainian farmland remains complex. Farmland prices have shown positive growth, particularly for commercially used agriculture land for sale in Ukraine. However, price registration discrepancies exist due to the mandatory minimum pricing based on the normative land value. In Q4 2023, 53.4% of farmland transactions had prices only slightly above this threshold, suggesting the real market price is significantly higher.
The estimated ratio of rental auction prices for communal farmland to the registered sale price is 1:5, implying that true market values could be at least twice the officially recorded amounts. The weighted average sale price of Ukrainian farmland for sale in Q1 2024 equated to just 4.6 years of rental income, highlighting potential undervaluation in official transactions.
Impact of Wartime Conditions on Ukraine’s Land Value
Several factors influence land prices, including soil quality, location, and proximity to conflict zones. The full-scale war has affected Ukraine’s farmland market unevenly across regions, with two key trends emerging:
- A shift in trade volume toward central and western Ukraine – Investors are increasingly focusing on regions further from the frontlines.
- Minimal impact on land prices in most regions – Despite the war, land values have remained stable in many areas and even increased in parts of central Ukraine.
In some central regions, land prices have risen beyond the rate of hryvnia depreciation, highlighting sustained investor confidence in Ukrainian farmland. The Zhytomyr and Vinnytsia regions, in particular, have seen impressive price growth, suggesting that land in areas relatively distant from active hostilities remains an attractive asset.
The Russian invasion has severely impacted Ukraine’s agricultural sector. Irrigation infrastructure has suffered extensive damage, particularly following the destruction of the Kakhovka Dam, which cut off water supply to 306,500 hectares of farmland. Currently, only one of four irrigation networks in southern Ukraine remains operational. As a result, agricultural lands in the central regions and the Transcarpathian region (Zakarpattia) have gained popularity due to their stability and lower dependence on artificial irrigation.
Before the war, the most active land markets were in Kharkiv, Kirovohrad, Cherkasy, Kyiv, and Chernihiv. Due to ongoing hostilities and restricted access to property registers in some regions, these areas have lost priority for land transactions. Today, the most active farmland markets are in Vinnytsia, Lviv, Khmelnytskyi, and Ternopil regions.
Regression analysis indicates that farm land for sale in Ukraine with irrigation infrastructure is valued 12.7% higher than those without. This suggests that restoring irrigation systems could significantly boost land values and agricultural productivity.
Future Prospects and EU Integration
Further farmland for sale market liberalization is expected as Ukraine progresses toward EU membership. Under Chapter 4 of the EU acquis, Ukraine may eventually have to allow EU citizens and companies to purchase farmland, aligning with the principle of free movement of capital. This could unlock further investment but will require careful legal and economic adjustments.
One of the key benefits of the first stage of land market liberalization has been its positive impact on horticulture investment. Prior to the reform, farmers were hesitant to invest in long-term agricultural projects—such as orchards—due to the limitations of lease agreements. Now, with land ownership rights secured, Ukrainian farmers are increasingly investing in perennial crops, boosting long-term agricultural development.
Since July 2023, demand for farms for sale in Ukraine has steadily increased, with former moratorium farmlands being the most sought-after. Additionally, the volume of farmland rent auctions grew significantly. If you’re looking for farm land for sale cheap in Ukraine, whether pasture land for sale or commercial farmland, exploring options like emphyteusis or lease can help secure profitable long-term investments.
How to Invest in Farmland in Ukraine? Options for Foreigners: Emphyteusis vs. Rent
Ukraine offers vast opportunities for agricultural investment, thanks to its fertile land and ongoing land market reforms. However, foreign investors face restrictions on direct land ownership. Two primary legal mechanisms — emphyteusis and land lease — allow foreigners to access and utilize farmland. Understanding these options is crucial for making informed investment decisions.
Understanding Emphyteusis and Land Lease
Both emphyteusis and lease agreements provide legal avenues for foreigners to use Ukrainian farmland for sale, but they differ in legal status, duration, and transferability.
Legal Nature
- Emphyteusis grants the holder a long-term real property right to use land exclusively for agricultural purposes. It is registered as an independent right, making it more autonomous than a lease.
- Lease Agreements are contractual obligations where the tenant has temporary rights to use the land as per the agreed terms with the owner. Unlike emphyteusis, lease agreements are not property rights but personal obligations.
Duration of Agreement
- Emphyteusis: Up to 50 years for private, state, and municipal land.
- Lease: Maximum term of 50 years, defined in the contract.
Transferability and Financing
- Emphyteusis: Can be sold, inherited, or pledged without the landowner’s consent, providing investment flexibility.
- Lease: Cannot be transferred or used as collateral without landowner approval, limiting financial leverage.
Choosing Between Emphyteusis and Lease
- Emphyteusis offers greater flexibility in selling or transferring rights, long-term security without the need for renewal, and the ability to use the land as collateral for financing.
- Lease provides a simpler and widely understood legal structure and easier negotiation for short-term agreements.
Conclusion
Ukraine’s farmland remains significantly undervalued due to regulatory constraints and geopolitical uncertainty. However, the resilience of land prices in central regions and the increasing focus on long-term agricultural investment signal strong market potential. As restrictions are lifted and investor confidence grows, agriculture land for sale in Ukraine could see substantial appreciation, making it an attractive opportunity for both domestic and international investors in the long run.
