Expanding farmland investment service in Romania

Brown & Co has opened a new office in Romania to help optimise returns for investors from what could be one of the next decade’s most lucrative farmland markets.

The office is located in Tecuci, 2.5 hours north east of Bucharest, in the country’s agricultural heartland. On offer is strategic investment advice, farm sourcing (agency/brokerage), valuation and due diligence, as well as land and farm management services, accountancy and administration.

“The overall aim is to provide a one-stop shop for investors seeking exposure to land and farming investments in Romania,” says Adam Oliver, partner at Brown & Co’s international division based in Torun, Poland.

Adam Oliver.

“It will build on our experience in Poland, from where we have been buying and managing land in Central Europe for the the past 17 years. Over that time we have learned the absolute necessity of being “in the market” and having a permanent local presence to fully understand local dynamics.”

The Tecuci office is run by country director Steven Ford-McNicol, who has extensive farming and commercial experience in the UK, Canada and New Zealand and who has been running his own 1,600ha farm in Romania for the past 12 years.

“I am delighted to be heading up Brown & Co’s activities in Romania where I have invested my own money. I believe the long term investment opportunities to be significant,” says Mr Ford-McNicol. “We have a local team in place that can manage the local complexities of land acquisition and management and are already engaged on several projects.”

Romanian farmland has the potential to deliver some excellent financial yields in the medium to long term, thanks to the country’s unique land ownership model that has kept price growth well behind that of other eastern European countries.

Local knowledge is key to unlocking these returns, due to the fragmented nature of land ownership in Romania, says Mr Oliver. The country’s 13.3m ha of farmland is split between 3.8m agricultural holdings, only 0.5% of which farm 50ha or more.

“Investment strategies have to deal with a huge number of landowners, who may only own a hectare or two each. This presents a real challenge when putting together a good-sized portfolio.

“Our new office will provide all the services investors need to purchase and manage land and farms and we offer all the associated administration and accountancy services required to ensure optimum returns.”

Farmland prices in Romania are the lowest in the EU, yet the country has a strong hand when it comes to agricultural production, benefitting from good, fertile soils, a warm climate and a basic but growing infrastructure.

Typical values range from €2,000-3,800/ha for small parcels of land. However, the market is currently increasing by about 16% a year and could continue to see significant gains over the next 10 to 15 years, Mr Oliver believes.

“Romania is in the same position as Poland was 15 years ago. In that time, farmland prices in Poland have risen from about €1,000/ha to €12,000-15,000/ha.

“Subject to political stability, which EU membership is now largely providing, there is every chance Romania, a big agricultural country in its own right, will follow the same trajectory.

“On top of this is the opportunity to realise some decent operating returns from crop production. It adds up to what we think is a very interesting investment case.”