Planting of new forests and woodland is a major investment opportunity, say experts
Tilhill Forestry publishes 2016 report on forestry industry.
By: Tilhill Forestry
Jason Sinden of Tilhill Forestry says: "With strong government support for planting in England and Wales, but particularly in Scotland, there is a 'once in a lifetime opportunity' to create a productive resource for future generations.
"Indeed, it is less than one week since the announcement of new government support for productive new woodlands in England, as all of the UK governments are recognising the role which productive woodlands can play in terms of timber production, carbon sequestration, wildlife conservation and flood amelioration."
This was just one of the key issues discussed at the launch of The UK Forest Market Report 2016
16th and 17th November, in London and Edinburgh, to a diverse audience of woodland owners, investors, lawyers, land owners and other representatives of the UK forest industry.
Forestry investment experts from Tilhill Forestry and John Clegg & Co highlighted the key topics contained within the report as well as providing comment on the latest IPD (Investment Property Databank) UK Annual Forestry Index findings. This year, for the first time since 2005, the report includes a review of woodlands and commercial broadleaf crops.
Jason Sinden Bsc (For) Hons, MICFor, MRICS, MBA Director of Investment & Property for Tilhill Forestry says investment returns in the sector are good, but that there is a shortage of good quality forests, especially in the younger age categories: "The UK timber processing industry is continuing to grow and develop as the forests, planted in the 1970's and 1980's mature. However, the lack of more recent planting means that there will be a shortage of timber in around 20 years' time. Investors planting productive new forests now will be an excellent position to benefit from this and there is also a ready market for young forests."
In Scotland, the forest industry is worth over £1bn annually, making it bigger than the fishing industry and its benefits are increasingly recognised by the Scottish government.
Fenning Welstead BSc (For) Hons, FICFor, FRICS Partner, John Clegg & Co says low interest rates are a good reason for having a proportion of a portfolio's assets in forestry. But one of his main concerns is the need for re-stocking:
"Creating new forests, however, is as important as restocking and more farmers are looking at releasing land to create outstanding forest resources for the future, potentially offering greater integration with farming."
During 2016, a total of £79.19 million of forest properties traded. This is a drop from 2015's record sales of £150 million, but that figure was heavily influenced by the sale of the UPM Portfolio for £50 million.
The 2016 sales figure is in line with that from 2014 at £82.85 million. The market was once again dominated by Scotland with 67% of the sales recorded. England recorded 29% of the sales, an unusually high proportion, due to a number of larger properties than are normally seen in England coming to market. Wales, with the remaining 4%, was characterised by smaller than usual properties coming to market. In total some 17,444 gross hectares (43,105 acres) of forestry was traded, of which 13,062 hectares were stocked or plantable. This is down 29% from last year's record of over 18,000 stocked hectares but is again influenced by the UPM Portfolio.
This year has seen some very large properties marketed. In Scotland, the Forestry Commission Scotland sold the Barracks forestry complex at Rannoch Moor with a gross area of 4,477 hectares. This is the largest single property traded in the UK in recent years. In England, there was an off-market sale in Cumbria of over 750ha, the largest property to be marketed recently in England. However, the market in Wales has seen smaller properties than usual coming to market with no properties larger than 100ha (stocked area) being sold. The average size of a sold property this year has increased to 195 hectares (from 188 hectares in 2015) and the average cost of a property is now £1.18 million. These averages are affected by some larger forests in the north of Scotland which have larger areas and smaller unit prices.
The full UK Forest Market Report can be downloaded from: www.tilhill.com
Tilhill Forestry Ltd, a wholly owned subsidiary of the BSW Timber Group was established more than 65 years ago. It is a national company operating from a network of offices throughout the UK. The company provides a full range of consultancy and contracting services to the forest owner and forestry investor.
For further information contact Suzi Christie PR Consultant for Tilhill Forestry on 01435 830031 or e-mail suzi@blueberry-