Forestry investment returns are performing well in the young plantation sector despite falling timber prices.
The Investment Property Databank Forestry Index for 2002 shows plantations up to 10 years old returned an average 9.7% since 1999, while the annualised return for forests of all age bands was minus 3.2%. This compares with the average UK equity return of minus 14.1% over the past three years.
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“Plantations up to 10 years old returned an average 9.7% since 1999” |
Price movements have only had a minor impact on young plantations because final timber values are heavily discounted when there is more than 20 years to the felling date. Forests more than 20 years old have been hit hardest by falling timber prices.
The Forestry & Timber Association welcomed the findings, adding: “Forestry is attractive as a tangible asset, largely escaping the vagaries of the stock market while offering amenity and tax benefits.”
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“ Forestry is attractive as a tangible asset, largely escaping the vagaries of the stock market while offering amenity and tax benefits” |
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Forestry & Timber Association spokesperson |
The index is calculated from a sample of private sector plantations of sitka spruce.
