Record year for UK forestry says latest industry report

The average annual return from UK forestry has been 18.8%, beating a range of other investment classes

Tilhill Forestry has joined forces with John Clegg & Co to launch this year’s UK Forest Market Report (FMR) which gives both the buyer’s and seller’s perspective on the UK forestry property market.

The FMR showed that a record £151.15m of productive forests were traded last year as the sector becomes an increasingly main-stream investment. In total, 98 properties comprising 18,435 hectares were sold.

During 2015, UK timber production also reached a new record, with a total harvest of 11.4 million tonnes, driven partly by standing timber prices, which were the highest they have been in real terms since 1998. High timber prices have contributed to the continued increase in average property price.

The UK timber processing industry has continued to invest in new capacity and ‘value added’ processing. Some 40,000 people are now employed in UK forestry and primary wood-processing (Source: ONS), making this an important employer, especially in rural areas.

Despite this, the UK is still one of the world’s largest timber importers, importing almost 80% of its total timber needs (Source: ONS).

George McRobbie, Managing Director, Tilhill Forestry explained "UK forestry has some of the highest environmental standards in the world and woodlands planted for timber production have multiple uses including recreation and conservation. The UK is the third largest timber products importer in the world which presents a tremendous opportunity for home grown timber.

“Indeed, the strong market in the UK is encouraging woodland creation, especially on marginal farmland. These woodlands are specially designed to produce a wide range of public benefits, as well as timber production.”

The findings of this year’s Report were revealed by experts from both companies at conferences in London and Edinburgh this month.

Fenning Welstead, Partner, John Clegg & Co, explains: “We’ve concentrated on commercial conifer forests which, in an area of low interest rates, provide a sound asset class underpinned by land ownership and real physical growth in the crop. The UK has world leading timber processing industries and meeting their demands for raw material provides a ready market for timber. Forest ownership is a simple and enjoyable investment in sustainable, green assets.

Recorded prices are higher in England ranging from £10,800 to £12,800 per hectare compared to an average of £8,497 in Scotland. In Wales prices have increased by 23 per cent to an average of £9,162 in 2015 compared to £7,077 in 2014.

Jason Sinden, Head of Investment and Property, Tilhill Forestry reminded the audience that over the last decade, the average annual return from UK forestry has been 18.8%, beating a range of other investment classes (source: IPD).

“Strong financial returns are encouraging investment in sustainable forestry in the UK. Indeed, there is now a compelling financial case for significant new woodland creation in the UK.”

“UK forestry is a great long-term ‘green’ investment, and with the increasing use of ‘forestry funds’ is now readily accessible to mainstream investors.

The report is available to view in the Knowledge Centre.