Generous tax breaks and rising prices for timber account for the feel-good forestry factor which saw investors profit from a 14.4% return in 2005 – the highest in 13 years, according to the lead story on the front page of the newspaper’s Money section.
Describing timber as a “a powerful addition to a diversified portfolio”, the Sunday Times said woodland is now one of the quickest ways to cut an inheritance tax bill.
Timber is the fourth largest import into Britain, but problems in one of the UK’s main suppliers – the Baltic states – means they are exporting less to Britain.
At the same time, demand for British timber is growing at home and abroad and prices are looking up.
Planned wood fuel power stations are also expected to account for 12% of British timber once operational.
“If investors are looking to invest in forestry, it should be a small but significant part of their portfolio – it is there to balance risk,” said Alistair Sandels at forestry management company fountains plc.
He said interest in forestry was clearly being stimulated by recognition of the tax benefits and added: “The difficulty we have is that there isn’t a great availability of properties. It is a very thin market so what is out there attracts premuim prices in certain areas.”
