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Fertile land is our world’s ultimate limited asset.
As real estate agents we offer farmland and rural residential properties in Uruguay and Paraguay, to a lesser extent in Argentina
Below a brief May 2011 market overview
- The best price/value for land you find in Paraguay, and the best chance/risk ratio. The most profitable farms (soya, sugar cane), intensivly operated and close to posessing plants
currently cost US$4000-5000 per hectare, cattle ranch land US$500-2000, virgin land forest covered in the semi arid Chaco region with good soil fertility costs US$150-400 per hectare.
It is significant to note that Uruguayan, Argentinian and even more so, Brazilian farmers invest heavily in Paraguay
Paraguay has the region’s most favorable tax regime, 10% personal income tax, 10% VAT. On the down side Paraguay ranks rather low when it comes to transparency,
quality of public services, rule of law, public security.
- Uruguay is in many aspects the opposite case. A mature civic society with strong rule of law and a distinctive european flair.
Just it isn’t cheap any more. With US$8.000-10.000 per hectare for prime crop land (soya, corn, wheat), US$3000-5000 per hectare for good cattle pasture (which would include some
minor fraction suitable for cropping) it is difficult to achieve an operational return above 4 or 5% anually. Virgin land does not exist anymore in Uruguay.
Income is taxed in the 15-25% range, VAT being 22%
Prices for land in the region rose 10-15% in US$ over the last 12 month, roughly in line with rising global soy and grain prices
Argentina and Bolivia are briefly discussed here :
Farmland as inflation hedge
Buyers of land real estate have a basic decision to make
- buy farmland and operate it oneself, be it with more of a leisure aproach or be it with a professional approach if one has what it takes, or
- buy farmland and hire a management company to run it, with management fees reducing return to some extent, or
- buy farmland and rent it out, rental return typically being in the 3% range, requires less attention then any of the above, and income being rather (though not 100%) predictable, or
- buy raw land that has potential to be converted into farmland (land banking), least attention required, no operational return.
Fertile land is our world’s ultimate limited asset. The purest form of land investment would be to buy raw (virgin) land real estate, where you pay no premium for anything man-made
(like buildings or an operational farm set up).
However, most of the world’s raw, idle lands will for ever stay that way, without agricultural value, being deserts, semi deserts, montain ranges, or lands that should be left untouched due
to environmental considerations.
Virgin land properties with potential to be productive agricultural land soon would have a favorable combination of climate, topograhy, soil fertility, environmental viability.
Land that is still virgin nowadays is usually so due to being remote, difficult to reach, so the extent of remoteness would be another factor to calculate.
Historic Estancias - investment in agriculture and gentleman farmer lifestyle combined : In Argentina as well as Uruguay a few more historic estates, estancias, dating from the 1850s to the 1900s, survived to this day, often quite stately in their appearance, with 100 years old parks, inner courtyards, galleries, heavy wrought iron window bars etc.
As a farmland investor one usually rarely finds a combination of reasonable agricultural potential and romantic flair or lifestyle. This would be such combination.
Those Estancia properties have become very scarce in the market. If we locate one, we list it.
Until recently owners did not ask a premium when an estancia contained stately historic buildings, because they are costly to maintain. This has changed now. Today a property with a fairly well maintained casco historico (“casco” meaning farmstead, or if stately, the mansion) and sufficient farmland to make it a viable operation, 300 hectare, grain-cattle combination, should cost US$3m (Argentina or Uruguay).
Peer Voss
pvoss@pvoss.de .
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Uruguay land prices US$ per hectar (ha), 1 ha = 2,47 acre - July 2011
modest buildings and infrastructure in reasonable condition
water is no issue in Uruguay, you have sufficient water supply everywhere, creeks or subsurface |
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$ 1.000-1.800
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marginal pasture land, (sheep, extensive cattle)
agriculture partly limited by topography (steep slopes, wetlands)
limited use for forestry due to lack of acces
Coneat 20-70
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$ 2.000-3.000
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marginal pasture land, (sheep, extensive cattle)
but apt for forestry (appropriate soils, proximity to paved roads, paper mills)
Coneat 40-90
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$ 2.000-3.500
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pasture land
apt for sheep, extensive to semi-intensive cattle breeding (feeding)
some fraction of surface should allow pasture improvements
Coneat 70-100
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$ 3.000-4.500
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farmland apt for crop/cattle.
Average or above average soil fertility (of high Uruguayan standards), allows intensive cattle feeding operation, at least half of surface should allow pasture improvements. At least 20% of surface should allow feed crop or cash crop.
Coneat 90-130
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$ 6.000-10.000
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farmland on rich agricultural (sedimentary) soils
apt for crops (corn, soya, wheat, sunflower etc), or crop/cattle rotation
Coneat 120-200
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additional
10%
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premium, if located in Uruguays southern, most developed belt, max 2h drive from either Colonia or Montevideo or Punta del Este
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Wall Street Journal on Uruguayan gras-fed beef
or Bloomberg on globally rising farmland prices/A>
some brief information of soils and climate, as compared to PR China.
Barron’s about farmland
with Marc Faber on farmland-rich Russia, Paraguay and Uruguay.
more about Uruguay : estancias-uruguay.com and
guest estancia Guardia del Monte and Tornero and farm land for sale Uruguay Argentina : Argentina Estancias
About Estancias as gentleman farming alternatives to: Masseria Storica in Puglia, Sicilia or Cortijo antiguo historico in Andalucia
and other historic mediteranian estates
photo pages :
Uruguay photos impressions
Uruaguy summer
Uruguay winter
abandoned estancias
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