👉 Valid farmland comparisons updated for 2016
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INTERNATIONAL FARMLAND COMPARISONS
We have made a comparison of the prices of agricultural land in ten countries. Six are located in South America, two in Asia, one in Europe and one in North America. They are Argentina, Australia, Brazil, Chile, Paraguay, Peru, Uruguay, United Kingdom, USA and New Zealand.
When researching current land prices, we found that only two countries in the sample have reliable data.
The Department of Agriculture of the United States publishes an annual report, which, among other things, succinctly reports the values of the purchases made during the period, according to location and national averages.
The Real Estate Institute of New Zealand produces semi-annual reports about prices paid during the last period, as well as other information.
We have no way to confirm that these reports do not contain errors or misrepresentations. We trust that they are accurate, basically, for the good reputation of both institutions.
Farmland comparisons updated for 2016
Our goal was to compare pastureland for cattle, and land for growing soybeans. During the course of our research, we observed that the values published on government websites, real estate brokers sites and agricultural news sites, only refer to land for livestock and crops, without further differentiation.
The price of a unit of land area differs according to various factors such as: geographical location, intrinsic quality or potential land use, property size, improvements to the soil in the form of physical works or plantations, public infrastructure in the area and investments in irrigation infrastructure.
Moreover, some of these factors change over time, altering the value of the land over the years, as well as changing the expectations of economic agents. Therefore we excluded the values of land with irrigation technology, fruit crops, land very close to urban centres etc.
In cases where there was no differentiation in the information, we proceeded to seek the publication of national average sale values. We considered a reduction of 25% for the price of land for cattle. In the case of the best land for crops, 50% was added to the average amount paid.
Farmland comparisons updated for 2016
This methodology is used to assess agricultural properties in some South American countries for tax and insurance purposes.
Then we validated the data obtained with offers of properties for sale at the present time. We observed a differential average, less than 10%, in such publications. We believe this validated the methodology, since the 10% difference is explained by commissions, and, being only offers, there is a margin for negotiating the final price of the business.
As a result of these considerations, and to keep a record, we advise revising at least semi-annually the prices of agricultural land using the same methodology, to maintain a permanent database of updated prices of agricultural land of much of world’s agricultural resources, and to compare prices of such agricultural land with land bearing similar characteristics in South America.
English Editor: Audrey van Ryn
Researcher & Translator: Mª Verónica Brain
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.
www.gatewaytosouthamerica.com
About Gateway to South America
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