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The general definition of agricultural land is based on Act No. 334/1992 Coll. to protect the agricultural land fund. This law also determines the main use of specific types of agricultural land (e.g. arable land, permanent grassland, vineyards, hop farms, other areas, etc.).

The quality of agricultural land (BPEJ) and its characteristics are determined by Decree No. 227/2018 Coll., issued by the Ministry of Agriculture. At the same time, it indicates which types of agricultural land are assigned a specific BPEJ. Another important legal standard is Decree No. 48/2011 Coll. on the determination of protection classes issued by the Ministry of the Environment and which determines the protection of agricultural land with a specific BPEJ.

You can find information about the BPEJ of the land on the title deed in section F and you can check it in the application Viewing the KN through the portal of the State Land Survey and Cadastre (www.cuzk.cz).

The quality of the soil comprehensively expresses its properties from the point of view of soil types (e.g. brown soil, black soil, alluvial soil), location in climatic zones, slope and orientation of the land with respect to the cardinal points.

The BPEJ value is given by decree and ranges from 0 to 20 CZK/m2. Simply put, the higher the value, the better the soil. If we proceed from this principle, the best quality soils are located in the regions of South Moravia (Uherské Hradiště district, Hodonín, Břeclav, Znojmo), Central Moravia (districts of Brno-venkov, Vyškov, Kroměříž, Prostějov, Olomouc, Šumperk, Přerov), small localities North Moravia (Opava district), in the Polabská lowland (districts along the Elbe river) and some districts of the Ústí region (Louny, Litoměřice). The most fertile soil in the Czech Republic is found in the ethnographic region of Central Moravia called Haná, which includes the districts of Vyškov, Prostějov, Olomouc, Šumperk, Přerov and Kroměříž.

In agricultural land trading, there has been a fundamental shift in market price determination over the last 10 years. Previously, the market price was mainly derived from the decree price according to the BPEJ and was the main parameter in determining the price per m2. In recent years, the gap between the decree and market price has opened significantly, and currently the main parameter for determining the market price is the location, taking into account secondary parameters (lease conditions, creditworthiness, size and location of land in the cadastral area, access to land, distance to built-up territory of the municipality, possibilities of use, etc.). An example can be the sale of a plot of land (without the possibility of change of use or conversion to a building plot) with a decree price of 5 CZK/m2 for a market price of 50 CZK/m2, where the main parameter was the location.

Currently, the average market price of agricultural land in the Czech Republic is 25.35 CZK/m2 (source farmy.cz). However, market prices vary significantly from location to location. In the main agricultural production areas, market prices range from 30 to 50 CZK/m2.

The average market price of agricultural land over the past 15 years has increased from CZK 6.83/m2 in 2005 to CZK 25.35/m2 in 2020 (source farmy.cz).

Within the terms of Agrární půdní fond s.r.o. we offer our clients appreciation in two variants, in the amount of 8.5% and 10% p.a.

The company Agrární půdní fond s.r.o. was created as a result of Mrs. Sosíková’s experience with investing in agricultural land and long-term cooperation with a real estate company. The aim of the company is to offer small non-agricultural investors the opportunity to evaluate financial resources in the form of a real investment – investment agricultural land. The minimum investment amount starts at CZK 100,000. No one is currently offering this product on the Czech market. The vast majority of entities trade or mediate the sale of agricultural land.

The company offers direct investment in the purchase of agricultural land by creating a portfolio of parameterized land with an assured return. The guaranteed return is 8.5% for an investment duration of up to 12 months or 10% for an investment duration of 12-60 months. Throughout the duration of the investment, the client is the owner of the land.

This product is an alternative to conservative bank financial products, mutual funds, building savings and corporate bonds.

At the same time, we are preparing the possibility of investing in the form of a corporate bond for those clients who do not want to own agricultural land.

We recommend a medium-term investment horizon with an investment duration of 36 months. However, it always depends on the client’s preferred investment duration.

The basic risk is the correct determination of the market price in relation to the parameters of a specific set of plots. Almost every plot of land is salable if priced correctly. It is only a matter of time when the right interested party appears who is willing and able to buy the land.

Correct assessment of land parameters, experience in agricultural land trading, knowledge of market prices in individual locations, knowledge of the issue of tenancy agreements and, finally, knowledge of the field of agriculture are the factors that distinguish successful traders and investors from less successful ones.

The issue of fundamental appreciation of agricultural land is rather an exceptional matter. An example can be a change in the zoning plan and the transfer of land from agricultural use to construction. Then there is a significant increase in the price of land due to the change of use. More common influences on the amount of investment appreciation are, from a macroeconomic point of view, the development of market prices for agricultural land, the development of demand in this segment of the real estate market, the development of inflation and interest rates, and possible legislative restrictions.

From a practical point of view, we will rather focus on the risks of holding land. In most cases, a lease agreement is concluded for the land, on the basis of which the tenant (farmer) uses our land and is obliged, among other things, to pay us the lease fee (rent). We should ensure that the agreed lease conditions reflect the real conditions on the market at the given time, especially the amount of the lease and the lease period. By concluding a disadvantageous lease agreement, we can significantly devalue the investment, and during the subsequent sale, we will have a problem finding interested parties at the required price. Furthermore, it is necessary to check at least once a year that the lessee complies with the terms of the lease and does not use the land in a way other than what was agreed upon. Once a year, it is appropriate to check the valid zoning plan and regulatory plan for the given cadastral territory due to the regime of land use and the creation of possible rights of pre-emption, which arise by law upon the entry into force of the zoning or regulatory plan according to § 101 paragraph 1 of Act No. 183/2006 Coll. , of the Construction Act. Another issue that we should pay attention to is any ongoing land improvements.