UK sees 40% increase in forest sales4 December 2017
More than £111m of forestry was sold in the UK in the past year, 40% more than in 2016, according to the latest forestry investment report.
In the annual UK Forest Market Report, Tilhill Forestry and John Clegg & Co report on a buoyant market characterised by high-value properties and portfolios, robust demand and a steady flow of new investors.
The report is based on information obtained from the sales of commercial forest properties between October 1, 2016 and September 30, 2017. It reveals the market returned to its normal growth after a quieter year in 2016.
Eighty-seven forest properties were sold, compared to 67 the previous year, for a total of £111.04m, up £31.8m from 2016 and against a five-year average of £104m a year.
A total of 17,272ha were traded, 78% of which were in Scotland. Forestry in England amounted to 18% of the market and Wales 4%.
The report confirms the MSCI IPD Index findings that the industry is in good shape with annualised returns John Clegg & Co partner Fenning Welstead said demand for large-scale commercial plantations was strong but supply was decreasing. With some notable exceptions, none had been established for almost 30 years.
“Many of the larger private plantations are now in the ownership of collective funds and portfolios," he said.
"Whether they will come to the open market again is debatable and these funds continue to seek further acquisitions. There have been some very strong sales this year as a result."
The report highlights the demand for farmland with potential for new planting schemes and underlines the fact that the future fortunes of farming “in the changing world of Brexit and generational succession will have a significant impact on forestry".
“There is a move towards exciting new afforestation programmes with positive support from grants and political will. Potentially, significant opportunity for afforestation may result either from existing farmland owners planting parts of their land or from changed ownership to forestry investors,” said Mr Welstead.
“The forestry industry is in good shape but much needs to be done to safeguard it for the future. We need to engage in afforestation and we need to promote an understanding of the need to plant trees.”