Buy farmland as an investment – like Bill Gates?

Is farmland a suitable investment?

The acquisition of agricultural land as a capital investment has gained global significance in recent years. Institutional investors and high-net-worth individuals in particular view farmland as a relatively crisis-proof form of investment.

However, while access to farmland in the USA is relatively liberal, Germany imposes significantly stricter legal regulations and a more critical societal stance toward large-scale land acquisitions for investment purposes.

Regulatory framework in the USA

In the United States, regulations for acquiring farmland are comparatively liberal. Both domestic and foreign individuals are generally allowed to purchase agricultural land. There is no nationwide regulation – instead, individual states govern property rights. While some states impose restrictions on foreign investors, the overall approach is market-oriented.

Investments in farmland are widely accepted in the U.S. as a form of wealth diversification, and numerous funds and REITs (Real Estate Investment Trusts) specialize in this asset class. The concept of “farmland investing” is firmly established in the American financial world.

Legal framework in Germany: The Grundstücksverkehrsgesetz

In Germany, the acquisition of agricultural land is subject to significantly stricter regulations. The key legislation is the Grundstücksverkehrsgesetz (GrdstVG).

It requires every buyer to conclude a notarized purchase contract, which must also be approved by the land transaction authority. This approval may be denied, for example, if:

• the buyer is not recognized as a farmer and local farmers have a higher-priority interest,
• the sale price is excessively high and may distort the land market,
• an agriculturally disadvantageous land distribution is anticipated.

The aim of these provisions is to safeguard agricultural structures, prevent land speculation, and facilitate access to farmland for farmers. Particularly large-scale purchases or transactions by investors are scrutinized.

Similar to municipal preemption rights in residential property sales, farmers are granted the right to purchase the land at the same price, leaving non-farmers empty-handed.

Recently, these rules have been applied less strictly. Part-time farmers now also have a realistic chance of being approved.

Failed attempt to bypass the Grundstücksverkehrsgesetz

Although farmers are prioritized over non-farmers, they must still pay the full asking price to proceed with the purchase.

Often, non-farmers acquire the land because the price is too high for the farmers.

To prevent non-farmers from outbidding farmers too easily, courts occasionally intervene in cases of inflated prices. A price up to 50% above market value is generally considered acceptable.

In 2020, the Higher Regional Court of Munich ruled that the price for a 4-hectare agricultural property near a highway was excessive (Az.: W XV 5/22 Lw).

Although the proximity to the highway justified a valuation as prospective development land rather than pure farmland, the purchase price was still deemed too high, and the sale to the non-farmer at that price was prohibited.

Societal acceptance

In the U.S., farmland acquisition by non-agricultural actors is broadly accepted. The debate focuses more on environmental protection and sustainable use than on ownership structure.

In contrast, in Germany, the entry of investors into the farmland market is increasingly viewed critically. Terms like “land grabbing” and “alienation of agricultural ownership” shape the public discourse. This is especially true in regions with tight land supply, such as eastern Germany, where there is growing resistance to large-scale acquisitions by corporations.

Not well-suited for non-farmers in Germany

While farmland purchases in the USA are largely governed by market forces and are socially accepted, Germany emphasizes agricultural policy goals and public sensitivity.

For investors, this means greater freedom and fewer hurdles in the U.S., while in Germany, thorough review of legal requirements and social context is essential.