The housing collapse in the US brought with it a fall in timber prices. Now things are looking up again and, as a result, timber stocks are looking rather attractive once more, according to USA Today’s John Waggoner. Since timber futures prices’ lowest spot in early 2009, they have increased by an impressive 93 per cent. Although this is slightly less than the recovery in the Standard & Poor’s 500 index, the improvement in the real estate market indicates a good reason to buy up timber REITs.
In the past 12 months, new home starts have jumped by 23 per cent and the fact that housing is now a lot more affordable than the last time housing starts increased, suggests that the turnaround will last longer and be more notable this time, claims FRA.
The forestry investment advocacy group supports the USA Today article, claiming that timber REITs are very attractive, but that there are also other options for those who are interested in investing in timber. “We promote investment in sustainably managed plantations, such as those operated in Brazil by firms like Greenwood Management,”
These plantations allow investors to directly invest in a piece of forestry land for as little as $10,000, which is a lot less than is involved when buying forestry independently. Then, firms like Greenwood manage these plantations for the owners and start paying returns to investors as soon as money starts coming in from any mature trees on the entire plantation.
Mr Collins claims that this option mean that investors enjoy the diversification benefits of forestry investment, but also get to see returns sooner than they would through other direct investment routes.
About Forestry Research Associates
Forestry Research Associates is a research and advisory consultancy that focuses on forestry management, sustainability issues and forestry investment around the globe.
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