Forestry remains appealing to investors

The UK's commercial forestry market has an "appetite for big purchases", according to UPM Tilhill, after market research revealed the value of plantations rose by 35-40% in 2007.

The area of forestry sold increased 8% year-on-year to 15,787 ha, with the value of sales up from £34.6m in 2006 to £67.1m in 2007, according to figures from UPM Tilhill and property investment adviser Savill's Forest Market Report. This equates to a value of £4,250 per hectare in 2007.

Average transacton values increased by 160% year-on-year to £762,000, although the report said that this was "atypical as they included a number of large and particularly valuable woodlands".

Crop age and yield class also helped improve the value of sales by improving on 2006's figures and creating an extra 40 tonnes of timber per hectare on average.

"There is a lot of optimism in soft commodities, and this includes timber," said Simon Hart, woodland investment adviser at UPM Tilhill.

"In 2007 we saw two very large transactions, one in excess of £10m and one in excess of £20m, showing the market has an appetite for big purchases when suitable property becomes available.

"It's clear that the long-term financial and environmental benefits of forestry remain appealing to a wide range of investors."

However, the report noted that rising values of woodland would mean that owners were likely to hold on to their land and that investment opportunities would require "careful evaluation".