Cultivated fields more profitable than apartments - Price of land expected to grow significantly within next four years

- Acquisition of an agricultural land is the safest investment because the returns are higher than the returns on investments in classical real estates or securities – Nedeljko Malinovic, director of Legat Nekretnine agency, says in an interview for eKapija.

The food price growth trend, expansion of urban areas and the announced investment in road infrastructure in Serbia made the land price immune even to the economic crisis so that it has remained unchanged in the vicinity of Belgrade and even grown in Vojvodina.

In the conditions of a gradual economic recovery that lies ahead of us, it is expected that the price of agricultural land will be growing at high rate.

- At this moment, it is impossible to buy a hectare of land in Banat for less than EUR 6,000, while the minimum price in Backa, where land is of the highest quality in Serbia, amounts to about EUR 10,000 per hectare – Malinovic stresses.

In the process of the EU integration, all countries in the region, especially those we bear similarities with, such as Hungary and Romania, experienced an increase in the land price of over 500 percent. Opening of the European market with over 450m inhabitants on one side and easier land acquisition procedure on the other side contributed to the fact that the investment in land in these countries is now one of the most profitable investments.

According to a research conducted by eKapija, current regulations make it impossible for foreigners to buy land, but full liberalization is expected upon the expiration of the period of four years from the ratification of the Stabilization and Association Agreement with the European Union. Since Serbia should acquire the status of a candidate in late 2011, foreigners will be able to buy agricultural land in our country starting from 2015 or 2016. If we have in mind the fact that Serbia should most probably acquire the status of a full-right member of the EU in 2020, it is reasonable to expect that the agricultural land price growth trend will get a full swing shortly before 2015. That means that domestic investors should use the legal and price advantage they have in the period 2011-2015 and, thus, readily await the liberalization of this market.

Foreigners are, actually, even now able to buy land in Serbia, but only if they previously set up a company in our country and carry out all transactions through it. These regulations reduce the interest of foreigners to a significant extent, which is why they often decide to invest in other countries.

The land price primarily depends on the vicinity of city centers, type and quality of road infrastructure, quality of land and irrigation water. The best example of an exceptionally attractive location is the area around the Belgrade Airport where 1 ha of land in the period before the crisis cost over EUR 1 million. Although that trend stagnated during the crisis, it is expected that the land price will start growing again. The reason is the announcement of construction of several shopping centers and industrial facilities in that area, as well as the continued food price growth trend.

Therefore, investors may find interesting the area between Belgrade and Novi Sad, stretching alongside Belgrade-Novi Sad and Belgrade-Sid highway.

- Any investment in agricultural land in Vojvodina is a profitable investment. The price of hectare in the vicinity of Ruma amounts to less than EUR 10,000 now. Generally, our country is in the center of the region with over 50m inhabitants, meaning that Serbia could produce food for the entire region – Malinovic adds.

That means that possible investment in land may be seen as a speculation, with the aim of selling that land once the price grows, as well as an investment in the agricultural sector.

An investor who has invested in land can also make profit from energy since the electricity generation from biomass is gaining in importance in our country as well. The most profitable production of this type of energy takes place at farms that combine production and processing of raw materials. Also, the Earth's crust in Vojvodina is extremely thin, which means that a relatively small investment may enable generation of electricity from geothermal resources.

M.D.