Forestry investment outperformed equities, bonds and commercial property in 2006, with the Investment Property Databank (IPD) Forestry Index recording a 20% rise for the year.
In contrast, average returns for equities and commercial property were 16.8% and 18.1% respectively.
The growth in the IPD Forestry Index is due to increased prices of forestry property and timber.
Forest manager fountains plc said in the past six months it had sold at tender standing Sikta spruce in south Scotland and Wales at prices regularly exceeding £20 per tonne and occasionally at more than £30 per tonne.
It said timber prices obtained in south-west England and north Scotland have also improved significantly.
The state forestry sector recorded a 14% growth in standing timber prices but it was outperformed by the private sector which saw rises of up to 30%, according to timber merchants interviewed by fountains.
Alastair Sandels, fountains plc director, said forestry as an asset class was considered to be low risk, as growth was in part biological and it performed counter-cyclically to equities. He said it was also considered to be less volatile than bonds.
