So why is timber a good investment?
Because investing in timber is not about the price of timber today.
Forestry analyst George Nichols, in a recent study has shown that the price of timber itself only accounts for a third of the return an investor makes on it.
The most important aspect of timber investing is the growth of the trees themselves.
Steady long-term biological growth accounts for 61% of the returns an investor makes on timber. Meanwhile, the quality of the land a forest covers accounts for just 6% of the return.
In other words, if the forestry investors are not satisfied with the prevailing timber prices at the time of the proposed harvest, they can of course choose to allow their timber to continue to grow. Trees do not know about banking crises, and global economic conditions and the longer they grow, the more valuable they become.
Timber also has a great long-term track record between 1910 and 2000, timber prices rose at an annual rate of 3.3% above the rate of inflation.
The United Nations Food and Agriculture Organization estimates that world consumption of wood products will rise by 60% over the next 25 years. China alone has increased its appetite for wood 16-fold in the last 12 years.
China’s building boom may be easing for now. But building homes, and panelling public offices for an urban population that is forecast to swell from 530 million to 875 million by 2030, will still put pressure on the world’s supply of timber.
The outlook for timber as an asset class is excellent.
The outlook for teak within that timber asset class is even better. Currently less than 5% of the world's teak production comes from plantation sources. The balance comes from natural jungles and a reduction in jungle logging will create further shortages of teak.
James Cahill, Managing Director of Costa Rica Invest, comments “teak in itself is an excellent investment and the combination investment of teak and building land in our premier project Finca Di Pacifico Dos makes the investment even more lucrative”
Costa Rica Invest specialises in eco-friendly, ethical, high yield investments. All projects are based in the best locations in Costa Rica, consisting of plots of development land with an environmentally friendly angle. Their current development in ‘Di Pacifico Dos’ combines a teak commodity investment traded in USD on plots of land zoned for development. With a double investment in locations where land prices are increasing rapidly, backed by a sound commodity that is constantly ‘growing’, is it any wonder they have so many repeat investors creating wealth naturally?
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Costa Rica Invest specialises in enironmentally friendly, ethically responsible, high yield investments, primarily in Costa Rica. Di Pacifico Dos is Costa Rica Invests current project investing in development land with the added value of teak trees.