“Investing in land in Paraguay is very profitable due to the production levels and the potential for further price increases”
Paraguay is and will continue to be very attractive for investment because it has many opportunities, growth potential and a favourable country framework. Those who buy land in Paraguay today will not only be profitable for what they produce, but also for land that still has significant potential for price increases, said Rodrigo Artagaveytia, director of Everdem. He also mentioned that the business of buying and selling land is having a rebound at the beginning of this year.
What is the current state of the farm real estate market in Paraguay?
The first thing I consider, beyond the situation of the markets, is that Paraguay is a country of opportunities and will continue to be so because of the quality of the soil it has and because the conditions for production are spectacular, therefore the market of land will be governed by supply and demand and by the investment that is arriving in the country. He will still have a long career because the country’s opportunities are enormous and there is much to do and grow.
What was the behaviour of the market in the last 10 years?
After many years of lethargy due to a lack of demand and sufficient capital to buy the abundance of land that existed in the country, the land market registered a strong increase accompanied by the rise in commodities and peak prices were reached there by the year 2011. From then on, the prices of commodities, such as soybeans, cooled down a bit and the investment that came to the country also retracted, and we had about 10 years of stagnation and deterioration in prices due to lack of demand. In this period of time, land prices suffered a drop of between 20 to 25% and remained with very few operations. The reality is that the land market in Paraguay has been asleep in recent years, with very few operations, very little demand and with stable values for several years now.
What do you see for this year and what are the projections?
What we see this year is a significant reactivation of the market for commodities such as soybeans and meat, which are the great products of Paraguay. Behind that logically comes an improvement in the profitability of the land and a consequent improvement in values. We are experiencing, on the one hand, better prices for the produce of the land; and on the other hand, an increase in interest in land by local and foreign investors. We started these first months of the year with greater interest on the part of potential buyers, but still with few concrete operations because this is not an overnight process, but we do see a clear change in terms of the demand for consultations and interest of potential buyers. This year several operations have already been closed compared to last year when there were few. There is a lot of demand, and therefore we believe that it will be a year of price recovery.
What is most in demand?
If one starts from the base of the high prices of products, there will be more demand for agricultural land, livestock and land to be developed for production. There is demand for an element that is essential for production, which is land, so there is an orientation of those who seek land for agriculture towards the Eastern region, and those who come for cattle ranching or property development, naturally with an orientation towards the Chaco. Also, several ranchers from the Eastern region entered agriculture and moved their livestock production to the Chaco because the land is expensive and agriculture is much more profitable on that type of soil. Therefore, if we analyze the evolution of the livestock stock in Paraguay, the relationship was changing; before there were more heads of cattle in the Eastern region and now it is equating and we are beginning to experience that the Chaco has more animals. The investment is focused on different types of businesses but it is indistinct because what is worth is all the products that are in the field and from there the demand is for all types of land.
Are national entrepreneurs or investors from around the world more interested in buying land in Paraguay?
Paraguay is, has been and will continue to be an attractive country for investment, both for local and foreign investors due to its natural conditions and its country framework. Paraguay has a stable economic policy, it has shown tax stability, it is a country that has never devalued its currency, it has been working year after year and doing things better to attract more important capital and help more to the development of the country. The investors are indistinct, and also seeing the evolution of the land, in the changes of fields that were previously only cattle ranchers to become agricultural and cattle ranchers, the Chaco that is growing in its agricultural production with nearly 200,000 hectares, the evolution irrigation, the complementarity of different items, and knowledge of the aquifer; All of this makes Paraguay attractive, not only because of the cheap land but also because today anyone who comes to invest in the country knows that they are going to obtain land as a production factor that will allow them a range of opportunities.
Who are those who seek the land?
They are those who seek opportunities to invest in safe, profitable businesses with growth potential. Whoever buys land today in Paraguay will not only be profitable for what it produces but will also be profitable for land that still has the potential for significant price increases to be comparable with the region. For example, in relation to Uruguay, land in Paraguay is still much cheaper to buy because they have different problems with infrastructure, of access, because Paraguay has not yet reached all the markets and meat is not yet sold like in other countries, because we do not have energy distributed throughout the country and all those factors that influence land prices in Paraguay to be the lowest in the region. To the extent that Paraguay develops, that it has greater productivity, complementarity and more infrastructure, prices will continue to accompany and approach the levels of other countries. Today those who invest in land come from different places, from different countries and for different items.
Where is it cheaper to get land?
Today it is cheaper to buy land in the Chaco because in the Eastern region the land is more developed. Those places where there is more to develop and discover are where you will have a greater possibility of growth and appreciation of your investment.
What are the price ranges?
In the Chaco, in the western region, which is an area that is changing a lot due to low rainfall, with a potential of 100 to 120 kilograms of meat per hectare, we are talking about USD 300 per hectare. And if they have irrigation potential or if they are on the aquifer, we are already talking about 500 dollars per hectare in virgin land. If we go to the central zone of the Chaco, we can have reference prices of USD 450 per hectare, and if we talk about established establishments, prices rise to USD 900 per hectare, where the potential meat production is 170 kilograms per hectare. On the other hand, in the eastern zone, where it already rains more, virgin land is at USD 500 per hectare and developed fields at USD 1,100 per hectare, which are fields that produce 250 to 300 kilograms per hectare. Those are reference values. In the Eastern region, it is more complex, with variations ranging from USD 800 to USD 11,000 dollars per hectare.
Source: Agro Value
Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.
The Gateway Team – When You are Serious About Property