MercoPress. South Atlantic News Agency

Land value in Uruguay soars 127% in four years

Price of land in Uruguay has soared in the two last years with the average going price for a plot of good grazing selling in the range of 1.400 US dollars a hectare, according to the latest report from the Uruguayan Landholdings Institute.

Uruguay has an estimated 16 million hectares of good farmland and in the first quarter of 2006 a total of 78.000 changed hands, 40% of which for forestry development. The 2006 first quarter average hectare price was 25% higher than in the same period a year ago.

The report also indicates that the price evolution continues to be bullish and if, as expected, the pulp industry takes root in Uruguay in spite of the controversy with Argentina, values can be forecasted to further increase.

According to Uruguay's Landholdings Institute the average price for a hectare of grazing land increased 16/17% in 2005 over the previous year. This means that the average hectare last year was selling at 1.115 US dollars which in real value is among the highest in history in US currency.

Land in Uruguay actually dropped to a historic minimum in 2002 following the Argentine financial crisis and outbreaks of foot and mouth disease, but since then have rocketed to the current values which represent an average jump of 127%. In the first two quarters of 2005, land averaged 950 US dollars the hectare, but by the end of the year had reached 1.200 US dollars.

Another interesting point is that during the almost four years in consideration, land prices have experienced a sustained increase.

As in non subsidized agriculture countries, value of land in Uruguay is highly vulnerable closely linked to the international price of farm commodities and taxes on land and crops.