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Investment continues in woodlands despite economy

The Report, an aid to buyers and sellers involved in the commercial forestry market, provides an annual snapshot of the UK commercial forestry market on properties larger than 25 hectares.

This year’s publication reveals:
* Average plantation prices have increased 82% in the last five years with 126% growth since 2002;
* In 2009, the overall market almost doubled in size to £48.2million;
* Forestry Commission sales account for 37% of the annual value traded;
* Sales in England doubled to 23% of the annual market value.

"Forest values for 2008-09 have declined slightly from last year but hold their own in an otherwise turbulent year and maintain the long term trend of increasing values since 2002," said Crispin Golding, Woodland Investment Adviser, UPM Tilhill.

"Demand for timber has increased substantially in recent years. Investors not only appreciate the timber aspects of forests but also the wider credentials of forestry, for example as a source of sustainable bio energy, a green asset and a place to sequester carbon."

The report reveals that there has been strong interest from industrial investors wanting biomass rather than timber within the Forestry Commission sales in Scotland. This interest reflects the strong and growing biomass market where projected demand far outweighs potential domestic supplies. This year an additional 750,000 tonnes of biomass energy capacity, equivalent to almost 9% of the annual UK softwood harvest, is expected to come on stream in Scotland alone.

The 2009 figures also show a rise in sales in terms of transactions, area and value, though they are not yet back to the level of previous record years. The number of forest transactions increased significantly in 2009 with 88 forests bought against 50 in 2008. The area sold recovered to 14,600 hectares, more than double the area in 2008 and the average property sizes have also increased to 166 ha (20% up on last year).

Values per hectare in 2009 have broadly followed the trends set in 2008 with the 25-50 ha category maintaining its exceptional value at almost £6000 per ha, 6% up on 2008 and 40% up on 2007.

"We have seen forest values remain insulated from the general recession indicating a capacity to hold value on the strength of confidence in the increasing demand for timber," said Ewan Berkeley, Savills. "After a slow market in 2008 we have seen a more buoyant market in 2009 with potential for improvement in 2010 and beyond."

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