Ukraine’s agricultural land market has shown remarkable growth since the beginning of the year, with a 30.4% increase in market activity and a 10.2% rise in the number of transactions. Additionally, the area of land circulating in the market has expanded by 4.3% since the start of July. These insights come from a joint analytical report by Ukrainian agencies KSE Agrocenter and USAID AGRO.

Land Prices Hit Record Highs After Recent Decline

Following a brief dip in May and June, agricultural land prices in Ukraine started to rise again in July 2024, reaching their highest levels since the market opened. The weighted average price for land sales in July stood at 46,000 UAH per hectare, marking a 4.5% increase compared to June and a 1.5% rise from May. Since the market was opened to legal entities on January 1, 2024, land prices have surged by 24% across all types of land, and by 19% specifically for commercial land.

Legal Entities Fuel Market Expansion

Since the market opened to legal entities, 953 companies have exercised their right to purchase agricultural land, with 363 of them making at least one purchase in July alone. This is the highest level of activity by legal entities since they were allowed access to the land market. According to Roman Neiter, a researcher at KSE Agrocenter, there is still considerable growth potential for legal entities in the market, particularly given that 23,500 agricultural producers in Ukraine are engaged in grain and legume production, and 18,500 are involved in sunflower production.

State Property Fund Launches Major Land Leasing Project

In a move to further stimulate the agricultural land market, Ukraine's State Property Fund has launched a large-scale project to lease state-owned agricultural land through open auctions on the Prozorro platform. The first 16 auctions were announced on August 30, offering plots ranging from 1 hectare to 4,000 hectares. Each plot will be auctioned as a separate parcel, allowing bidders to lease both large and small areas. The starting price at auction is set at 12% of the land’s normative monetary value. The winning bidders will secure the right to lease the land for up to 14 years for annual crops or up to 25 years for perennial crops, with the first year's rent paid upfront.

The State Property Fund plans to auction approximately 100,000 hectares of state agricultural land across 20 regions of Ukraine by the end of the year. The first regions where land will be available include Khmelnitsky, Kirovograd, Kyiv, and Zaporizhzhia.

A Rapidly Expanding Market with High Potential

Ukraine’s agricultural land market is experiencing significant expansion, driven by rising prices, increased transactions, and the active participation of legal entities. With the State Property Fund's ambitious auction plans, the market is poised for further growth. As more land becomes available and legal entities continue to engage, we can expect this trend to continue, making Ukraine’s agricultural sector increasingly dynamic and competitive.

The rapid growth of Ukraine's agricultural land market is a clear indicator of the sector's potential. As prices reach new heights and more legal entities enter the market, the landscape is evolving quickly. The upcoming auctions by the State Property Fund could be a game-changer, bringing more land into circulation and further driving the market's expansion. This is an exciting time for Ukraine's agricultural industry, with plenty of opportunities on the horizon.