The agricultural land market in Bulgaria is on the verge of overheating, according to the latest data from the National Statistical Institute. Over the past decade, field prices in certain areas have skyrocketed more than 6-fold, reaching levels where natural resources must be extracted to recoup the investment. Real estate experts warn that a bubble is inflating, and it will soon burst, drawing parallels to 2013 when land prices plummeted by nearly 50% within a single month.
Transactions have stalled recently due to high prices and problems in the agricultural sector, as indicated by data from the Chamber of Notaries. Sellers are demanding unrealistic values for their land, while farmers are reluctant to buy, squeezed by low prices for agricultural produce and the skyrocketing cost of fertilizers and fuels that make production more expensive.
The market is dominated by speculators seeking quick profits, artificially driving up prices by buying and reselling plots without considering their real characteristics and potential profitability. This practice fuels the bubble and risks a sharp price drop. However, when discussing land prices, one should not overlook that it is the primary productive resource of Bulgarian agriculture, which is currently experiencing its most challenging period in years.
Bulgarian agriculture has been hit by a triple storm. The low prices of Ukrainian grain have collapsed the country’s production and impacted the largest farms. The government aid granted is a mere drop in the ocean compared to the constantly rising prices of fertilizers and fuels, according to farmers. Illegal farm produce imports and labor shortages are further crippling the industry.
Without profits from agriculture, there are logically no candidates willing to purchase land. Brokers advise owners of agricultural land to first research the real prices of their plots. Like any productive asset, the value depends on several factors – land fragmentation, irrigation, and the ability to produce agricultural output.
Farmers should be aware that small plots are difficult to cultivate, and in some areas, they remain uncultivated. Therefore, it is challenging to expect a profit from them, and their prices remain low. A third pitfall for prospective investors is the quality of agricultural land. A good price is only the one that has been processed and subjected to compaction (balding).
There are also pitfalls in rentierism – for example, if there is only one tenant on the land, they become a monopolist. If the average rent is BGN 50 (EUR 25) per hectare, they can offer 30, and this should be enough, because there is no other candidate on the horizon. Lately, it is a common phenomenon for defrauded owners to have tenants who do not pay. Payments due can be sought through the courts.
It’s not uncommon for someone to take land away – through fraud or a simple legal trick. The Title Act gives title to immovable property by statute of limitations with bona fide possession for five years. This means that a fraudster has the opportunity to prove that they were a good landlord and, without notifying the real landlord, become the owner of the land. (Novinite)