Cost of Ukrainian land increases amid high demand and investment interest

In 2024, the Ukrainian land market opened to legal entities, including agro-holdings, companies, farming enterprises, and investment groups and funds. These entities typically pay more for land than individual buyers. According to the Ministry of Agrarian Policy, the average price offered by legal entities upon market entry was 62,656 hryvnias ($1,481) per hectare. This suggests that Ukrainian land is an undervalued asset, and there are reasons to believe it will continue to appreciate.

"The increase in land prices in Ukraine is driven by high demand, market development, and limited supply. After legal entities were allowed to purchase land in 2024, interest in agricultural land grew," said Ihor Lisetskyi, coordinator of the land committee of the Ukrainian Agribusiness Club (UCAB). "Land is also an attractive asset for investors due to its stable value and high productivity, making it a crucial resource in the agricultural sector. The main buyers are agricultural companies, farmers, and investors who see long-term economic potential in land."

"Among other key factors influencing prices, it is important to consider the competitive environment. In areas with a high concentration of farmers, prices are increasing, while in regions with a monopoly, prices remain relatively stable," the Ministry of Agrarian Policy told hromadske.

Agricultural expert Ivan Tomych attributes the price increase to consumer inflation, which stands at 12% annually.

"The current average cost of a hectare of land is equivalent to a ton of potatoes or 350 kilograms of cucumbers," said Tomych, indicating that the price of Ukrainian land should be even higher.

Land purchases increase significantly

Ukraine has a total of 33 million hectares of agricultural land. Since the moratorium was lifted in July 2021, a total of 604,000 hectares of land have been sold. In 2024 alone, 320,660 hectares were sold, accounting for 53% of the total land sold since the moratorium was lifted.

"This indicates that, despite the opening of the land market, only a small percentage of citizens have exercised their right to sell their land plots over the past three and a half years. However, the volume of land sold in 2024 was larger than in the first 2.5 years after the moratorium was lifted," said Agriculture Minister Vitaliy Koval.

"Very few people want to sell land, but after nearly three years of war, people are desperately short of money for food, so they are starting to sell," explained agricultural expert Ivan Tomych.

Residents of the western region stand to gain the most from selling agricultural land. For example, in Ivano-Frankivsk Oblast, the average price per hectare is 93,141 hryvnias ($2,202), according to the Opendatabot platform, making it the most expensive land in Ukraine. This region's landscape is close to mountainous terrain, making these plots attractive for those looking to change the land's purpose for construction.

Land is also expensive in the neighboring Lviv Oblast, at 71,896 hryvnias ($1,700) per hectare. Conversely, the cheapest land is found in the Mykolaiv (31,698 hryvnias or $749), Dnipropetrovsk (32,266 hryvnias or $763), Sumy (31,144 hryvnias or $736), and Chernihiv (34,396 hryvnias or $813) oblasts.

The land market is most active in Poltava Oblast, where 45,622 hectares were sold in 2024. The Odesa and Dnipropetrovsk oblasts follow, with over 30,000 hectares sold in each. The western regions of Volyn, Rivne, and Ivano-Frankivsk saw the least land sales.

"For example, in Vinnytsia Oblast, the number of responses to land sale offers increased by 30% last year, leading to a significant price increase. In contrast, demand in regions close to the frontline has decreased, keeping prices lower," reported OLX.

However, the actual sale price of some plots may be significantly higher than the information provided by the Ministry of Agrarian Policy.

"Prices may be higher. This could indicate a significant underreporting of land prices to avoid declaring official income sources and minimize tax payments," writes Agroreview.

"This is how land is often divided, especially when changing its purpose—for example, for construction," explained Denys Marchuk, deputy head of the Ukrainian Agri Council (UAC). "Take the land around Kyiv; it's a goldmine for making money."

Proximity to the recreational zones of the Carpathian region also significantly increases the value of plots.

Additionally, according to the company Tvoye Kolo, which operates in the land market, prices in highly competitive oblasts (Vinnytsia, Khmelnytskyi, Ternopil, Zhytomyr, and Poltava) range from 97,000 to 131,000 hryvnias ($2,293-3,097) per hectare, while official statistics from the State Geocadastre indicate a price range of 46,000 to 59,000 hryvnias ($1,088-1,395) per hectare in these regions.

Rental prices for land also increase

The situation with land rental prices has also become quite interesting.

In 2024, the State Property Fund launched the "Land Bank" project to lease state-owned lands through online auctions on the Prozorro.Sale platform.

Initial estimates indicated that leasing 1 hectare of land would bring an average of 9,900 hryvnias ($234) per year to the state budget, with 860,000 hectares of state-owned land available. This figure was also reflected in the October review by the Kyiv School of Economics: the average rental price for a land plot owned by municipalities was 8,600 hryvnias ($203) per year.

However, the average price from the October auctions was 29,600 hryvnias ($700) per hectare. As reported by the publication Minfin, the head of the user department of the Prozorro.Sale platform, Oleksandr Matsapura, stated that as of early December 2024, the average annual rental price for one hectare of state-owned land was 28,000 hryvnias ($662)—approximately three times higher than the initial market indicators.

Experts believe this is an anomalous situation that does not reflect market realities. One reason for such a price increase could be that the Land Bank leases large land plots, while companies typically deal with a large number of small plots, which is less convenient.

High rental bids resulting from competitive auctions reflect the real value of land and the willingness of farmers to pay for efficient land plots, according to the Land Bank. This stimulates more efficient land use, the implementation of modern agrotechnologies, and increased overall productivity in the agricultural sector.

"Everyone is talking about the huge profits from leasing state-owned lands, but paying such amounts for leasing one hectare is unprofitable; there is no such business, it is unrealistic," said Denys Marchuk from UAC.

However, the average rental price for state-owned land in 2024 was 12,087 hryvnias ($286) per hectare per year, compared to 7,623 hryvnias ($207) the previous year, according to the Ministry of Agrarian Policy.

In response to a query from hromadske, the Land Bank noted that the new benchmark for the state land rental market is an average annual price of 30,500 hryvnias ($721) per hectare.

Who are the buyers of Ukrainian land?

"The opening of the land market has positively impacted the agricultural sector, stimulating investment, improving land productivity, and creating a transparent market," said Ihor Lisetskyi, an expert at UCAB. Who are the current buyers of Ukrainian land?

Legal entities are actively purchasing land. By the end of 2024, the share of legal entities in the agricultural land purchase market was 23.4%, although in September, the figure was 27.7%. Ukrainian businesses purchase an average of 4,800 hectares of land per month.

The opening of the land market to legal entities in January 2024 provided additional stimulus for demand, according to OLX Real Estate.

"This has made land attractive not only to farmers but also to investors who view it as a promising asset. Such interest fuels competition among buyers, especially in central and western regions of Ukraine," analysts said.

Typically, investment companies and funds purchase agricultural land to lease it out.

"Land cultivated by farmers is a classic real estate asset whose owner receives stable income from farmers in the form of rent. On average, rental income is 8-12% of the market value of the land," said Hanna Hladun, a lawyer at the consulting company Zemfond (Land Fund of Ukraine).

The investment fund Tvoye Kolo encourages its clients to invest in land, offering an annual return of up to 15% in dollars, which is significantly more attractive than Ukrainian government bonds in dollars, which offer returns of 1.75-4% annually.

"Now, land is being perceived as a classic real estate asset, like an apartment. Investors include entrepreneurs, farmers, and military personnel," it adds.

Agricultural expert Ivan Tomych said that small agricultural companies cultivating one or a few thousand hectares have a demand for land and are purchasing it. Large agro-holdings, on the other hand, prefer to increase their land banks indirectly by acquiring shares or corporate rights of smaller agricultural firms that own land.

Land needs a fair price

The Ministry of Agrarian Policy expects land prices to increase by another 20% in 2025. Despite numerous skeptical forecasts during the launch of the land reform, the market has proven to be stable, and the number of land purchase and sale transactions is steadily increasing, noted Deputy Minister Denys Bashlyk.

"In 2025, it is unlikely that the prices for agricultural land will increase significantly. Most likely, the increase will be at the level of 2024, especially in the central and western regions. Demand and prices may increase if farmers have the opportunity to increase exports, which will boost their profits," analysts at the OLX Real Estate platform said.

However, the increase in land supply, including the demining of lands affected by Russian aggression, could mitigate price increases. In 2024, 285,000 hectares of agricultural land were demined, with the government allocating $1.07 billion for this purpose.

For 2025, the Ministry of Economy plans to provide 1 billion hryvnias ($23.8 million) in compensation to farmers who conduct demining independently, involving experts in explosive ordnance disposal.

"We want to demine more this year than we did in 2024," said Deputy Minister of Economy Andriy Teliupa during a webinar at the Center for Economic Strategy.

"The increase in agricultural land prices in Ukraine will likely continue in 2025, but the pace will depend on various factors. Positive factors include economic stabilization in 2025, increased demand for agricultural products on the global market, and the end of the war. However, negative factors include risks in frontline regions, and unstable logistics for exporting agricultural products," said Ihor Lisetskyi, an expert at UCAB.

Agricultural expert Ivan Tomych forecasts a 15-25% increase in agricultural land prices. "In the coming years, the price of Ukrainian land is unlikely to reach average European levels or at least the levels of neighboring countries," he noted.

For instance, in Poland, the cost of agricultural land ranges from €2,500 to €50,000 per hectare (110,000 to 2.2 million hryvnias), and the rental price ranges from €600 to €1,400 per hectare per year (26,500 to 61,900 hryvnias).

"Most likely, a significant increase in land prices will occur after the war ends, when the economy stabilizes and better conditions for investment in agriculture emerge," analysts at OLX Real Estate concluded.