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#AGRIFRANCE — 16.05.2019

Agrifrance Report 2019 : Farmland Market in France

Following a dip in 2017, prices resumed normal levels in 2018.

Etude Agrifrance 2019 I BNP Paribas Wealth Management

A hectare of French farmland in 2018 sold for on average €6,270, up 2.96% year-on-year. This resumption of normal prices must be considered in the context of the recovery in grain markets. Prices in France are still below those of its European neighbours. Furthermore, it takes 7 years of revenue to acquire a hectare of land in France, compared with 18 years in Germany and 23 years in England or Wales. Over the past 10 years, French farmland has appreciated by on average 4.5% annually.

Agrifrance Report 2019 I BNP Paribas Wealth Management

Grain-growing land prices continue to outstrip grassland

Arable land is 35% dearer than grazing land. A hectare of graingrowing land costs on average €7,590 compared with €4,950 for pasture. Prices were up 3.27% for grain-growing land compared with +2.48% for grassland.

At the top end of the market, the best grain-growing land fetches in excess of €25,000 per hectare. Such regions include Nord-Pas-De-Calais, Santerre, Champagne Crayeuse and Saint Quentinois, as well as certain regions in the south of France, such as Crau and the Durance Valley. At the bottom end, the cheapest land costs between €2,500 and €3,000 per hectare in Mayenne, Morvan and the Jura for example. 

In a low interest-rate environment,farmland remains an attractive asset

For landowners, the average price of leased land in 2018 was €5,165 per hectare, i.e. up 2.5% on 2017. There was a noticeable increase in grain-growing land (+2.8%) versus grassland (+2.1%).

For the second year in this decade, rents fell again (-2.4% y/y vs. 2017). Nevertheless, based on an average farm rent of €160.50 per hectare and per annum, the gross rental yield on leased farmland is 3.1%. In today’s context of low interest rates, that is not a bad return. The average gross yield varied between 3.5% for grassland and 2.8% for grain-growing land, depending on the region and type of land.

The agri-food sector is increasingly facing many challenges (economic, environmental, social, technological). Production systems need to be transformed to adapt to changes and achieve more autonomy. The rural land market does not escape these challenges, and new forms of alternative financing are emerging (crowdfunding, land piggybacking by external investors, etc.) and we are seeing a growing number of non-operating investors.

 

Etude Agrifrance 2019 I BNP Paribas Wealth Management
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About Agrifrance

Agrifrance is the specialist rural property division of BNP Paribas Wealth Management, Wine making properties, beautiful prestige homes, agricultural fields, forest areas. With more than 40 years of experience in this area, Agrifrance supports its clients in their heritage approach. With its network of recognised professionals, Agrifrance is also able to provide complementary services such as expertise in and management of rural properties.
For almost 20 years, Agrifrance has been producing an annual report that provides insight into rural land investment. This year, the study focuses on the rural land market in Britain.

Agrifrance is one of the asset diversification services proposed by BNP Paribas Wealth Management alongside Private Equity, Real Estate and Art Advisory