Ukraine has had a free land market for four years now. Since July 1, 2021, individuals and Ukrainian legal entities have been able to start buying land.
The land market itself has not significantly changed rental relationships - only a few cases of rent increases were related to the expiration of contracts or the purchase of plots that were not leased.
Increased Competition and Rental Income
The implementation of electronic trading by the State Land Bank through the ProZorro system has allowed for more land rental deals to be made through auctions. This has led to increased competition among investors and a 20-40% increase in rental income.
'There are cases of increased rental rates, but this is predominantly where lease agreements expire or when a plot is purchased that is not subject to leasing. After the introduction of electronic trading, many deals occur specifically at auctions. Competitive bidding increases income by 20-40%,' said Volodymyr Nahornyi, founder of the land agency 'Volodymyr.'
The Impact of War on the Market Situation
After the losses, Ukraine's 25% of territory, competition for land has significantly increased. A large number of agrarians have also moved to the west of the country, creating additional demand for land in these regions.
Future Forecast
Experts predict that rental prices for land in Ukraine will rise by 5% in dollar terms, and the price per hectare will increase by 10%. This may lead to an average price per hectare of agricultural land reaching $2200 by 2025, compared to the current $2000.
Over four years of a free land market in Ukraine, a reform has been implemented that has led to increased competition and growth in rental income. It is forecasted that land prices will continue to rise as a result of territorial losses and changes in the agricultural sector due to the war in Ukraine.