Historical Performance of Land Prices - Estonia

Overview

As some of our users have requested more transparency on the land market statistics, we have decided to put together some basic statistics on the historical land prices which we would like to share with you in this short news update.

Estonian Combined Forest and Farmland Price Index

We sourced all available historical land data from the Estonian Land Board and the figure below shows the average price movement for all lands and separately for farm and forest lands.

Figure - Combined Historical Price Performance for Estonian Farm- and Forestland 

Estonian Farmland Price Index

Figure - Historical Price Performance for Farmland

Estonian Forestland Price Index

Figure - Historical Price Performance for Forestland

Land Returns

How about land returns? We next asked a question if the annual returns vary and if they vary by land type and if there are any patterns in the variation.

Finally, we provide some summary statistics for the lowest price point (2020) by each type vs the highest, most recent price point. As can be seen from the table below, while the average value per hectare as of last year is higher for forest land (8.2k EUR/ha), the farm land performed better historically as it started from a much lower base.

Figure - Total Annual Returns for both Land Types

As we can see there is great variation across land returns and there seems to be a great drop around the Great Financial Crisis (GFC) and a significant spike from 2021 to 2022 due to the recent security and energy crisis in Europe.

The figures by land type are similar although the patterns are slightly different.

Finally, we summarise the key price and return calculations in the table below:

Table - Estonian Land Prices and Returns by Land Type

Conclusion

There was a significant price shock especially in 2022 due to the energy and security crisis (please see our post on Estonian land price increases in 2022),  and this has implications for our land valuation methodology as well as your portfolio. We will be reviewing our land valuation methodology over the next few days, applying a new price appreciation multiplier and re-valuing our land portfolio upwards to reflect these new statistics. 

This will be covered in a separate post, but hopefully these statistics above illustrate the upwards trend in performance of your LandEx assets.