Increase in prices of farmland in the Czech Republic

Abstract

Purpose

The purpose of this paper is to express the development of market price of farmland in the CR and to describe causes and effects of these changes in the price on the ownership of land in the country.

Design/methodology/approach

Primarily, description methods (especially for describing the creation of investment farmland funds) and a comparative analysis (in the case of an indicator of the farmland prices in the Czech Republic) were used in this paper.

Findings

The findings show that the situation in the Czech agricultural sector has improved particularly due to increasing subsidies; non-agricultural subjects are showing increased interest and banks are changing their approach to granting loans for the purchase of farmland. The market price of farmland in the Czech Republic has been rising; in 2015, it exceeded CZK162,500 per hectare on average. However, it is still low compared to the old EU member states.

Practical implications

Practical implication of the paper consists in comparing market prices of farmland with prices at which state sold farmland through PRGLF. Plot owners are often approached about the sale or lease of farmland. However, there are many speculators among those interested in buying, who often focus on those owners who have no idea regarding the value of their plots.

Originality/value

In the paper, the model of farmland prices was newly used and applied to real data in the Czech Republic from 2004 to 2015. Moreover, current data on investments to farmland were acquired, and an analysis which could be useful for foreign investors was elaborated.

Citation

Severová, L., Svoboda, R. and Kopecká, L. (2017), "Increase in prices of farmland in the Czech Republic", Property Management, Vol. 35 No. 3, pp. 326-338. https://doi.org/10.1108/PM-07-2016-0036