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Expert: average land share may cost $ 80 thousand after abolition of land sale ban

Expert: average land share may cost $ 80 thousand after abolition of land sale ban
Danylo Pasko
Photo: Photo: Max Trebukhov

An average land share in Ukraine is potentially worth 80 thousand dollars, said Danylo Pasko, a partner non-governmental organization EasyBusiness.

Speaking at a roundtable conference at Gorshenin Institute in 17 February, Pasko refuted a common misconception that in the conditions of a free market the land will be bought up by foreigners.

"No, they will not, because there is a direct legal restriction. However, even in the countries without such restriction these risks have never materialized. In any country – poor or rich, great or small - the share of land owned by foreigners never exceeds 10%."

Quite the opposite, the presence of foreigners only spurs the demand on the market and pushes the price of land up, Pasko argued.

In 18 countries worldwide, where foreigners are not allowed to own land, an average price of hectare of land is at 3,833 dollars. In the countries where foreign ownership is partially allowed, the price of land ranges from 8 to 9 thousand dollars per hectare. Meanwhile, in countries where no such restriction exists, the price per hectare average at 19,336 dollars.

"In Ukraine, an average size of a land plot after privatization is at 4 hectares per household. If we had an open market, each of them would own an asset worth 80 thousand dollars. Fancy a 60-year-old grandmother with 100 dollars of pension a year who is in fact the owner of an asset worth 80 thousand dollars," said Pasko.

The expert stressed that ineffective agricultural holdings who are obsessed by short-term profits, and corrupt officials who run the state-owned land are the main stakeholders of the existing ban on the sale of agricultural land.

"Another myth is that the land would be bought up for pittance by agricultural holdings. In actual fact, the moratorium is something that just creates the scale of today's agricultural holdings. Today, such holdings are taking advantage of the moratorium by expanding their land assets through leasing arrangements to tens, hundreds, thousands of hectares. Should the land market function properly, firstly, the land would have to be bought, and secondly, the price would be higher. They would have no choice but focusing on efficiency rather than scale," said Pasko.

Danylo Pasko is a Ukrainian businessman and investor. He is the creator of the initiative of foreign university graduates Professional Government, and the project on the deregulation of the Ukrainian economy Easy Business. In 2014, he led a group of advisers under the Ministry of Economic Development and Trade of Ukraine.