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What Will Happen to the Ukrainian Land?

Our country is looking hot to some investors. A new decade brings new dreams and new investing ideas.

After the financial collapse of 2008-2009, Ukraine's economy is completely reviving again, with 6 percent growth from January to May of this year.

Long-term prospects may be bright. With assets costs still low, analysts admit now is a good time to purchase Ukrainian assets or securities.

Liberalization that can allow the purchasing and selling of land could be one of the most compelling investment spurs. President Viktor Yanukovych called for the "formation of a transparent" agricultural land market in his June 3 address to the nation as part of his government's plan.

"Now the government is determined to push land reform through as soon as possible," according to Phoenix Capital's Andriy Yastreb.

Land market liberalization – deleting the current moratorium on land sales to creating a fully-fledged market in land – will trigger a sharp spike in the price of land. This in turn will trigger a surge in the value of agriculture companies, who currently have exclusive purchase rights on land they lease.

"Appreciation may be steep," Yastreb admitted. "Ukrainian land, although widely known for its high quality, is at the moment cheap."

Just how steep is illustrated by the Russian experience: Following the introduction of a private land market in Russia in 2001-2002, the price of land increased from $300 to $2,000-3,000 per hectar of black earth land equivalent to Ukraine's.

In contrast to Russia, foreigners will most likely remain banned from owning land in Ukraine, at least at first. "But foreign investors who want to invest in land will be able to do so through buying shares of Ukrainian agricultural companies," Yastreb dded. Ukraine's agriculture sector has a large and growing number of publicly listed companies both in Ukraine, but especially on foreign exchanges.



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