The average price of commercial forestry on the market in the UK rose 23% in the year to September 2019, supported by timber prices, government schemes and investor interest.
This is according to the UK Forest Market Report, produced by Tilhill Forestry and John Clegg & Co and released on Wednesday (27 November).
Average values rose to £11,478 a stocked hectare and the total value of the forestry market increased 21% to £22.3m, due to the properties trading rising in quality and number.
Peter Whitfield, business development director at Tilhill Forestry, said: “It must be stressed this is a volatile figure, which is in part a reflection of the excellent quality of the forests that came to the market this year.
“Deviations in the quality of properties sold distort the comparison and, if we were to compare like-for-like examples, we would probably see something closer to a 10-12% rise. That said, there is clearly a genuinely strong uplift in the market.”
Prices on the up
Commercial forestry transactions worth £126.5m completed in the past year, the second-highest figure in the report’s 22-year history, totalling 14,235ha and 81 forests.
The average cost was £1.56m, with 69% of properties selling above their guide price and 14% selling at more than 150% above guide.
Forestry values have increased almost 90% since 2016 and remain higher in England, followed by Wales, with Scotland the cheapest.
Scotland held the largest share of sales (78%), with the rest split evenly between England (which had a quiet year, down on 2018) and Wales (which had a busy year, up on 2018). In Scotland, five properties sold above £5m and 15 properties sold below £500,000.
Prices are driven to a large extent by timber prices, as well as interest rates and agricultural land values.
Fenning Welstead, director at John Clegg & Co, said: “With the softening of timber prices this year, it might be thought that forest property values should follow suit. This is not happening and we believe this is a direct reflection of the trend towards renewable resources and a move to a low carbon economy.
“Ownership offers opportunities for alternative land uses; for example, renewable energy and commercial forestry crops are a popular blend. Additionally, with a potential carbon tax in development, there is the possibility of an annual income for sequestering carbon.”
Scotland exceeded its planting target of 10,000ha, achieving 11,210ha, while both England and Wales are down overall on their targets.