The forest market is attracting a growing number of investors, many of them new to the industry, according to the latest Forest Market Report publiched by Tilhill and FPD Savills.
Simon Hill of Tilhill said: “The total value of the freehold market rose for the third consecutive year to £19m despite the background of lower timber prices; a clear indicator that returns from forestry are proving increasingly attractive to private investors in these low inflationary times.
“Uncertainties in many investment markets have encouraged investors to look again at forestry.”
The report says other interesting pointers were a wider divergence of both above and below the agent’s asking price, indicating a greater uncertainty as to exactly where values lay in 2002.
Recorded sales leapt to 106 in 2002 from 57 the previous year, suggesting a significant number of purchasers new to forestry. Most of the buyers are UK-based as overseas purchasers are deterred by the high value of the pound.
Nearly half of all sales were in the smallest category of between 20-25ha and only 17 in the largest band of more than 200ha. As with last year, prices were highest for smaller properties.
Looking to the future, Richard Stirling-Aird of FPD Savills said that timber market fluctuations were not the only influence on prices. He added: “Low interest rates and reduced returns from other investments make forestry yields more attractive, especially when coupled with continuing tax incentives.”
