The Agribusiness sector in Spain has captured the attention of investors, demonstrating an attractive investment opportunity, especially for those with considerable capital. According to CBRE, institutional investment in Spanish Agribusiness has shown remarkable growth, increasing by 20% in 2022 compared to the previous year, reaching €1 billion. By 2023, this figure is expected to exceed €2 billion.
With regard to demand, since 2017 there has been a growing interest in rural properties, with an average of 400,000 units transacted in the last six years, and 234,000 in the first half of 2023. Of these, 43% were concentrated in regions such as Castilla y León, Andalusia and Castilla-La Mancha.
According to the consultancy firm, the professionalisation of the agricultural sector has facilitated the entry of institutional investors. This interest is based on attractive returns and the opportunity to develop diversified investment portfolios, minimising volatility and reducing the risk/return ratio.
Manuel Valadas de Albuquerque, Agribusiness Leader for Southern Europe at CBRE, said: "Investor interest is expected to continue to rise in Spain due to the attractive yields on offer, the rising price of productive land with water and the opportunity to develop diversified portfolios (minimising volatility and reducing risk). In this sense, everything suggests that in the coming years Agribusiness will be consolidated as a strategic sector with a fundamental role in the Spanish economy, with sustainability and technological innovation being two fundamental pillars that should form part of the roadmap of all market players".
"Everything points to the fact that in the coming years Agribusiness will consolidate itself as a strategic sector with a fundamental role in the Spanish economy".
Globally, there are more than 900 investment funds specialising in the agribusiness sector, a notable increase from just over 100 15 years ago. Although North America continues to lead with more than 50% of this investment, Europe is increasing its share, with the Iberian Peninsula standing out for its climate, crop variety, land quality, efficiency of irrigation systems and farm size.
Deals in the sector vary in risk and return. Lower risk investments, mainly buy and leaseback, offer returns of between 5-8%, and are led by pension funds and large insurance companies. Intermediate risk investments, with expected returns of between 8-12%, involve the acquisition of land and its management by an operator. Finally, the highest risk and return transactions, expected to exceed 15%, are led by private equity funds focused on acquisitions of stakes in companies in the agricultural sector.
Agribusiness investment is on the rise in Spain
The Spanish agricultural sector is a global benchmark, contributing significantly to the economy (9.2% of GDP compared to 6.6% in the EU), society and the environment. The positive balance of trade in the agri-food sector in the first half of the year was 8,000 million euros, with an export value of close to 35,000 million euros.
The importance of agribusiness in Spain is also reflected in the 17 million hectares of agricultural land used, 76% of which is rain-fed and 24% irrigated. Spain is the second largest agricultural country in the European Union. Among the most important crops are olive oil, almond and citrus, highlighting the increase in olive oil prices, which has quadrupled since 2019, reaching 7.7 €/kg with the latest available data.
