Buying a land plot of 14 ha with an orchard in Armenia

Armenia is a republic with great agricultural potential, in particular in terms of the cultivation of vegetables, fruits, as well as exclusive sorts of grapes for the production of wine and wine drinks. Today we’ll discuss how to become the owner of a land plot with a young garden of 14 hectares, which is located in the village of Ujan , Aragatsotn Marz (first line). This fairly  large land plot is suitable for any agricultural activity, for example, growing greenhouse fruits and vegetables for sale in the EAEU or Europe, unique types of cacti and other flowers, which is a profitable business in great demand in Armenia.  

The cost of the property is from 142 000 USD with legal support for the sale. As a ready-made orchard, the land plot has the additional advantages for establishing a winery, cognac, vodka factory or a company for the production of juices and soft drinks.

Let us consider in detail how attractive the plot is in the village of Ujan , and what privileges the wine business in Armenia provides. It is worth noting that, foreign investors and businesses who create new jobs, can apply for a special residence status (for 10 years) for “special services” to the country, and subsequently apply for full Armenian citizenship. 

Buy land in Armenia for starting a business – the situation with land in the Armenian jurisdiction

Despite the strong economic recovery in the last 2 years, Armenia is characterized by a large amount of idle agricultural land. The Government of Armenia has decided to explore this issue and develop a viable solution in form of an action plan for leasing land plots that are not cultivated by the owners.

Such an approach, according to the Prime Minister of Armenia Nikol Pashinyan , will make it possible to exploit all the land resources of the country without changing the final owner. Moreover, the rent prices will be set specifically for each region, village and category of land. In the near future, it is planned to introduce a mechanism of leasing land for growing fruits, vegetables, cereals, berries.  

Among the possible issues that require regulation at the legislative level, the Prime Minister highlights:

• strong fragmentation of plots (usually 0.3-0.4 ha), which means multiple agreements with a large number of owners for combining land into one plot;
• setting a fixed rental rate;
• taking into account the interests of farmers and the state, seeking a compromise.

At the moment, it is quite difficult to find a plot of 10-20 hectares for a large project, and it is even more difficult to assemble small plots. Therefore, the RA government makes considerable efforts to resolve the issue as fairly and transparently as possible. This is one of the reasons why buying a land plot of 14 hectares in Armenia with an orchard (4 hectares) is beneficial due to the integrity of the said land plot and the single ownership.

Also, the Prime Minister emphasized that all discussions regarding the lease of agricultural land should be open, and the State Committee of Real Estate Cadastre is obliged to study site maps in the near future. The government of the republic emphasizes that when introducing a rental mechanism agreed upon by the Ministry of Economy, disagreements may arise between the authorities and land owners, however, officials are ready to meet them.

Buying land in Armenia – the main vectors of agricultural business development

Since 2018, the following branches in the agricultural sector of Armenia: of  experienced a drastic development:

• cattle breeding (animal husbandry);
• cultivation of fruit orchards;
• viticulture;
• growing berries and vegetables for export.

Constant support of the government, including agricultural insurance and other subsidized state programs, encourages foreign investors and businesspeople to buy land in Armenia. Firstly, assets in the form of agricultural land are protected at the legislative level. Secondly, there are certain benefits for producers working in the agricultural and livestock sectors. Let’s dwell more on the specific details.

Having decided to buy a land plot in Armenia with an area of ​​14 hectares at a price starting from 142 000 USD, a foreign investor or businessperson can use the agricultural insurance mechanism introduced in October 2019. The need to develop this strategy arose after large losses of crops yields and financial damages caused to farmers whose plots suffered from hail. The program provides for compensation for damage not only in case of loss of the future crop, but also of the financial resources spent on the works. An insurance bureau specially designated for this purpose deals with insurance issues, and compensation may be provided for up to 50% of the damage caused by late frosts, hail, and other natural disasters. 

Let’s consider in detail what the insurance of the agronomic sector looks like:

• With an insurance policy for 60 USD, the farmer has the entitlement to receive compensation up to 1,000 USD per 1 ha due to hail or frost; 
• the program was launched in October 2019 in 6 regions of Armenia simultaneously;
• the price of the policy is fully dependent to the average yield in recent years at a particular site;
• farmers are allowed to purchase more expensive policies based on data on increased productivity, as a result, receive increased compensation;
• The cost of the policy is 1 to 10.

Buying land in Armenia – other subsidies from the state for the development of orchards

In the decision to buy land in Armenia, foreign investors and businesspeople can apply for a state subsidy provided for entities with orchards from 0.5 to 5 ha. Funds will be provided at 5% per annum with a repayment period of 7 years, while the first year will involve preferential terms. This decision was adopted by the RA Ministry of Agriculture with the aim of expanding the existing orchards and increasing the interest of entrepreneurs, cooperatives in the cultivation of fruits. 

It is worth noting that those who plan to buy a land plot in Armenia with fruit trees are provided with privileges on customs duties when exporting products to the EAEU member countries (the preferential regime was extended until the end of 2020). In 2018 alone, Armenia exported about 4,000 tons of yield (fruits and berries). The Russian market remains the main consumer. 

The attractiveness of Armenian fruit crops is that they are environmentally friendly products that potential buyers prefer to collect directly following the period of harvesting from fields/gardens. In the countries of the EAEU and Russia, Armenian apricots, cherries, cherries, strawberries, vegetables – potatoes and carrots, are especially valued. The development of orchards in Armenia is a priority issue, as in 2017 the deficit of fruits and berries in the EAEU exceeded 7 million tons, and this figure has been increasing from year to year.

Attention: from personal sources it became known that there has been an increased demand for land plots of the Republic of Armenia by UAE citizens. At the moment, the objective of potential investors is not yet fully clear: whether this property in Armenia will be used for personal management, or plans to lease it to farmers. Given the vast experience of UAE investors in investment and business, it is possible that the citizens of this country have made their calculations on the potentially high benefits of acquiring land in Armenia.

Why is it profitable to buy a land plot in Armenia with an orchard to establish your own business?

For foreign investors planning to open their own production of wine and alcohol products, buying a land plot in Armenia with an area of ​​14 hectares is advantageous, especially given the fruit trees that grow on the land plot. The garden (apple, apricot, peach, quince, pear, cherry, cherry) occupies 4 hectares, the irrigation system is fully installed. Additional areas can be used for the expansion of the orchard or the development of production facilities.

Read more about the benefits of winemaking in Armenia in this material . 

If the plans of a foreign investor include registration of an economic entity for the cultivation of fruits for export, the  benefits are as follows:

• duty-free import of products to the EAEU market;
• facilitated search for buyers (in most cases, buyers find the farmers themselves);
• minimum business maintenance costs;
• the opportunity to receive special residence status for “special services” to Armenia (including the creation of new jobs);
• obtaining state protection of the crop from natural disasters;
• participation in subsidy programs.

Another option is the opening of a distillery, cognac or winery. The process of registering a company in Armenia is quite transparent and simple, the procedure takes place remotely in 1-3 business days. At the same time, the specifics of the activity provide for obtaining special permits and licenses. For details, contact our lawyers for advice and legal support.

Buying land in Armenia – features of the transaction

Foreigners who want to become the full owner of the land in the village of Ujan on the first line must:

•   establish a legal entity that will be the owner of the land or
• obtain a special residence status / citizenship of Armenia;
• acquire land in the name of an authorized person with the citizenship of the Republic of Armenia, and after obtaining a passport of Armenia, register ownership on the property.

The seller has all the documents for the land, with a certificate of ownership. The cost of land in the village of Ujan with an area of ​​14 hectares starts from 142 000 USD, including legal support and preparation of necessary documents. 

When planning to buy a land plot in Armenia, consider the following intricacies:

• in Armenian jurisdiction, verbal agreements are not legally binding;
• cash settlements are not welcome here, as an option you may use notarial assistance or opening an escrow account with a local bank;
• Settlement of the transaction is carried out in Armenian drams or USD (as agreed with the seller);
• if necessary, a preliminary contract of sale is drawn up, an advance payment is made to confirm the buyer’s intentions.

If your plans are to buy a land plot in Armenia with an orchard of 4 hectares (with a total area of ​​14 hectares), please contact our specialists by e-mail info@offshore-pro.info. We will be happy to assist in drawing up the necessary documents, as well as help to obtain a special residence status, and in the future – citizenship of the Republic of Armenia. Also, you may use our services if you need to register a business in Armenian jurisdiction, open any type of bank account or select real estate for residence / acquisition.  

What difficulties can an investor encounter in buying land plot in Armenia?

Agriculture is one of the main sectors of the Armenian economy, accounting for a large share of GDP. Therefore, the purchase of a land plot in Armenia with an orchard is a profitable investment with the opportunity to become a supplier of organic fruits. The main problems faced by land owners in Armenia remain:

• strong fragmentation of plots into small areas (from 0.3 to 0.4 ha);
• lack of a fixed rental rate;
• lack of clear legislative basis for protecting the interests of farmers at the state level.
  Currently, the RA government is in the process of developing a law that will protect farmers and foreign investors who invest in the development of agriculture in the Republic of Armenia.