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UK Forestry Market Delivering "Excellent Returns"

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United Kingdom  Savills  UPM Tilhill  Forestry Commission  George McRobbie  Jonathan Henson  Forestry Investment  Agricultural Land Investing 

UK Forestry Market Delivering "Excellent Returns"

By - Friday 30 November 2012

While most people considering property investment instantly look towards bricks and mortar, it is those thinking outside the box that could actually be enjoying a greater rate of return. According to a new report launched by Savills and UPM Tilhill, the UK forestry market is proving itself to be a much coveted asset.

Over the last 12 months, demand has continued to be strong and high quality, mature woodland is a mainstay of the sector. This has resulted in an increase in average sale prices of 49 per cent of stocked hectare, with values exceeding asking prices by an average of 23 per cent last year alone. The market has seen much growth over and competition is fierce, especially for large blocks of land.

According to the report, this is reminiscent of farmland activity and those investing in forest property enjoyed a return of 34.8 per cent for the year to December 2011. The Forestry Commission has also noted a significant standing timber sales price, increasing by over 26 per cent in the five years to September 212.

Jonathan Henson of Savills said:  “As we predicted last year, UK timber prices are not being supported by the exchange rate to the same extent they were in 2011. However, true to form, the sector has not been susceptible to short-term fluctuations. In fact global economic woes have only served to highlight woodland as a sound medium to long-term investment and it has continued to outperform most alternatives.”

George McRobbie, managing director for UPM Tilhill, added that with demand for timber increasing, investors are beginning to see the potential of production and the wider credentials of forestry, including sustainability and a source of bioenergy. It is this which perhaps secures the future of the market, as the government pushes biomass as a way to meet energy requirements. What’s more, investors can enjoy a tax advantage, as there are significant IHT savings and Capital Gains Tax exemptions to be had.

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