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Forest values reach record high and set to rise further
(UPM Tilhill, London, 29 November 2010 ) – Forestry, which is often seen as a safe investment in uncertain times, is proving an excellent option during the on-going financial crisis, according to a report by Savills and UPM Tilhill.
A stagnant economy in the UK, and the continued crisis in the Eurozone, suggests that woodlands will continue to provide an important diversifier of risk in any investment portfolio for some time to come.
George McRobbie, Forestry Operations Director for UPM Tilhill, said: “2011 has seen a welcome lift in the market with impressive values being achieved throughout Great Britain across a wide range of property types and values. We recorded a surge in forest values with an average of £4,650 per stocked hectare being attained, the highest level since our survey started and 34 per cent (£1,174) up on 2010. This is equivalent to an annualised increase of 13.7 per cent since 2003. Optimism is clearly strong and overall the market is rising, backed by clear investor confidence and strengthening timber prices.”
Jonathan Henson, Director for Rural Savills, added: “Demand for forestry remains high. IHT considerations, Capital Gains Tax exemption and tax advantages on income derived from timber have always attracted buyers, as do the opportunities for enjoyment, sport and leisure. However, the sector’s green credentials are becoming an increasingly important driver for buyer demand, particularly in the light of both UK and Scottish government’s renewable energy targets. Woodland properties frequently offer opportunities for wind turbines and hydro-electric schemes, while demand for timber products is likely to increase as a result of the support offered to biomass projects by the Renewable Heat Incentive.”
The IPD UK Forestry Index shows a return of 20 per cent for the year to December 2010 and the Forestry Commission indices show the coniferous standing timber sales price up by over 70 per cent in the five years to September 2011. The current levels of growth have taken place in spite of an ailing construction sector. Looking to the longer term, as economies start to recover and development activity increases, demand for timber both as a fuel and construction material can only increase.
In markets such as this one, Mr Henson stresses, where demand is high and supply is restricted, investors need excellent market awareness and to be in a position to move quickly when opportunities arise.
As a leading rural property specialist Savills has considerable experience in handling the purchase and disposal of rural property, and maximising returns from forestry investments throughout the UK. The company’s rural team helps forestry owners realise the potential of their assets through diversification into a wide range of activities including renewable energy, leisure and sporting pursuits.
With its seedling to harvester management service, UPM Tilhill works with companies or individuals who are considering investing in forestry. The company’s team of Woodland Investment Advisers helps customers buy, sell, manage or harvest timber and get the best from their forest regardless of the size or location.
For a full copy of the Forest Market Report 2011 log on to www.upm-tilhill.com or www.savills.co.uk
Notes to editors:
For further press information contact: Beth Hocking, PR Manager Savills on 0131-247 3700 or firstname.lastname@example.org or Suzi Christie PR Consultant for UPM Tilhill on 01435 830031 or e-mail suzi@blueberry-
The UPM Tilhill/Savills Forest Market Report analyses short-term trends in the UK and complements the Investment Property Data bank (IPD) Forestry Index, which charts long-term financial returns from forestry. The analysis for the report is based on UK data over the year to 30th September 2010 and the previous eight years. It examines forests in excess of 25 hectares, (predominantly coniferous), which typify the investment market. The survey includes all known/recorded public and private sales of commercial plantations of over 25 hectares.
UPM leads the integration of bio and forest industries into a new, sustainable and innovation-driven future. Our products are made of renewable raw materials and are recyclable. UPM consists of three Business Groups: Energy and pulp, Paper, and Engineered materials. The Group employs around 24,500 people and it has production plants in 16 countries. UPM's annual sales exceed EUR 10 billion. UPM's shares are listed on the Helsinki stock exchange. UPM – The Biofore Company – www.upm.com
Savills plc is a leading international property services company with a full listing on the London Stock Exchange. The company has undergone dynamic growth in recent years establishing itself as a powerful player on the international stage, with offices and associates throughout the UK, Europe, Asia Pacific and Africa. Savills advise on commercial, rural, residential and leisure properties. Savills Research Department provides advice and analysis to clients across Britain and overseas, with specialists in the agricultural, residential, and commercial property sectors. Savills staff have extensive experience in the valuation, purchase, sale and management of woodlands, acting for both private and institutional clients.