Forestry investment has outperformed the commercial property sector for the fourth consecutive year, according to the IPD UK Forestry Index.
Forestry returned 11.1% in 2009, compared to 3.5% for commercial property. The performance, which IPD said reflected an increased demand for land-based assets and for timber, was up from 7% in 2008 but behind the highs of 2006 and 2007 when returns of 20.6% and 31.6% respectively were recorded.
On a three-year annualised basis to the end of 2009, the total return was 16.1%, ranking forestry ahead of UK equities.
“Timber prices are difficult to predict but the promise of renewable energy incentives, backed by climate change commitments, will increase demand for wood which will drive prices forward, but the role of currency exchange is also key,” IPD said.
“With uncertainty over the level of future economic activity in the Eurozone, bold predictions of further timber price rises are hard to justify.”
Sikta spruce plantations in southern Scotland delivered the highest return in 2009, with 21%.
