Woodland and forestry prices have more than doubled in the past five years and plantations remain a “safe haven” for investment in uncertain economic times, a report has revealed.
Average prices for plantations over 25ha hit £3,596/ha – over 100% more than in 2003, according to the 2008/09 Forest Market Report from Savills and timber company UPM Tilhill. Like-for-like prices had increased by 10-20% over the past year, and a rise in the average size of forest sold to 135ha meant the total 2007/08 market value was £24.4m.
Capital growth and inheritance tax mitigation were the main factors driving woodland demand, although the report said the expanding biomass market was starting to boost values.
But forests had not escaped the economic downturn completely. Falls in timber price had reduced demand for coniferous standing sales and softwood sawlogs, which could affect the value of mature woodlands with immediate fellings, the report said. Prospects for younger woodland were more optimistic, because the weak pound made imported timber expensive, and demand for wood pulp exports to Scandinavia and Finland remained constant.
Small woodlands with amenity value close to urban areas also continued to attract strong interest and high prices.
Ewan Berkeley of Savills commented: “Though it is expected to be a cautious market in 2009, good buying opportunities will exist, but careful evaluation is required before making a purchase.”