Investment in the agri-food sector is projected to reach around 2,000 million euros by 2023, according to the latest CBRE agribusiness report. This marks the second year in a row of rising investment, with a 20 percent increase observed between 2021 and 2022. In 2023, spending is expected to be spread fairly evenly between land purchases and sales and the agri-food processing and distribution chain.
The agri-food sector holds strategic significance for Spain, where it dominates the agricultural landscape. It contributed 9.2 percent to GDP and generated a positive trade balance of approximately 8,000 million euros after exporting about 35,000 million euros in 2022. The sector encompasses a wide range of assets, from farms and agricultural ventures spanning olive groves, almond trees, woody crops like avocados or pistachios, and garden crops such as tomatoes, to all supporting industries used in production. It also covers related activities in forestry, animal farming, and rural recreation. The scope is broad, and not all components are captured in every assessment, as noted by Manuel Valadas of Albuquerque, a department lead in Southern Europe at CBRE.
Buying and selling of farms
Spain currently has about 17 million hectares of cropland, with roughly 76 percent dedicated to dry farming and 24 percent to irrigation. Spain ranks among the strongest performers in the European Union for agricultural expansion. CBRE identifies olive oil, almond trees, and citrus fruits as the core crops. Agricultural land remains in high demand, and over the past six years the market has processed more than 400,000 rural properties per year on average. In the first half of 2023, there were 234,000 transactions, with Castilla y León, Andalusia, and Castilla-La Mancha accounting for 43 percent of them.
The current investment appetite is concentrated in irrigated regions. Areas dependent on rainfall or smaller-scale agricultural production attract local investors, while larger, water-secure tracts draw funds from larger investors. The trend shows a preference for expansive properties with woody crops such as hazelnuts, avocados, citrus, and subtropical fruits, though horticulture is not excluded. This perspective comes from CBRE’s agribusiness leadership in the region.
Who are the main investors?
Manuel Valadas of Albuquerque highlights four investor profiles shaping the Spanish agri-food sector. Local residents purchase land in their own regions; family offices may allocate portions of their portfolios to rural assets; industrial groups participate in processing and distribution; and private equity funds cover several stages of the value chain. Notably, private equity tends to invest more in the industrial side, genetics, and technology rather than land acquisition itself, according to CBRE’s assessment.
CBRE’s research shows a large pool of active and specialized funds in the agricultural-food sector, with around 900 funds taking part. The European market has seen a steady increase in activity as investors and managers explore opportunities across the landscape, while North American investors have historically accounted for more than half of this activity. The Iberian Peninsula is emphasized for its climate variety, soil quality, irrigation efficiency, and farm sizes, which together enhance production efficiency. This context helps explain the region’s strong appeal to both local and international players.
The main pattern in the industry is land purchase followed by lease or sale-back arrangements. These deals typically offer returns starting around 5 percent and can exceed 15 percent in some circumstances. The least profitable asset tends to be uncultivated land, while pension funds and large insurers often target returns between 5 and 8 percent. Operators who own and run a farm can achieve roughly 8 to 12 percent, and private equity investments in companies operating within the agricultural sector may exceed 15 percent. Leasing land usually carries different risk and return dynamics compared with leasing a producer, as crop-related risks must be managed by the lessee. CBRE notes that direct investment in land with water access and renting to producers remains a low-risk strategy that has benefited from substantial appreciation in recent years.
Two notable benefits exist in this market: rental income and land value appreciation, with agricultural land values rising at double-digit rates in recent years. While future revaluation may slow, a continued positive trajectory is expected, likely in the high single digits. Investments aimed at generating around four percent returns are rarely pursued. In terms of price levels, agricultural land can range from 30,000 to 100,000 euros per hectare, with uncultivated land with water rights typically costing 30,000 to 50,000 euros. For certain crops such as avocados, prices can reach or surpass 100,000 euros per hectare, according to CBRE’s agribusiness leadership.