Forestry investments once again outperformed all asset classes in 2007, returning 31.6% according to the Investment Property Databank (IPD) UK Forestry Index.
Forestry’s returns in 2007 were well above those of commercial property, equities and bonds, which returned -3.4%, 5.3% and 6.4% respectively.
Timber prices helped push forestry’s returns up, rising 46.3% year-on-year in March, and 66.4% compared to March 2006.
The news follows PricewaterhouseCooper’s Branching Out report, which said deal values in the forest, paper and packaging markets rose by US$1.9bn in 2007.
“The principal return drivers of tax treatment and timber price underpinned by the emerging wood energy sector, continued to support capital growth into 2008,” said Alastair Sandels, from forest manager Fountains plc.
“The asset class is characterised by long-term, low-risk, low returns, providing risk mitigation for investors.”
Mr Sandels added that “in the long-term, demand will outstrip supply”, maintaining forestry’s role as a valuable investment.
