Woodland owners have enjoyed sparking results by investing in forests and trees in the past five years as prices have more than doubled in the past five years.

The latest Forest Market Report 2008/9 from UPM Tilhill and Savills covers the commercial woodland market for areas of more than 25 hectares or 62 acres.
 
It highlights
Woodland owners have enjoyed capital growth of 125 to 150pc in the past five years.
Average plantation prices have risen by more than 100pc with headline growth at 52pc since 2006.
Like for like prices have increased by almost 20pc in 2008 compared to 2007.

“In a year which has seen oil prices reach record levels, the economy slip towards recession and the nationalisation of three major banks, forest owners are really bucking the trend,” said Simon Hart, who is UPM Tilhill's woodland investment adviser.

“The report shows how forests and woodlands can be seen as a safe haven in these uncertain economic times,” he added.

This year, the average plantation price per hectare reached L3,596, continuing the long term trend of rising values for woodland. The average size of forest sold was up 10pc on 2006 figures at 135ha - representing a total market value last year of L24.4m.

But woodland owners, who have seen strong growth in values and brighter forecasts, are taking a long view and holding on to their investment, the report noted.

The Forestry Commission's decision to bring woodland property to market next year is expected to boost these figures for 2009.

The report also highlights the growing biomass market, which is beginning to have a positive impact on woodland values. Wood fired plants at Shotton, Teesside and Lockerbie, alongside new projects at Drax in North Yorkshire, are beginning to generate a real and sustainable source of income for woodland owners.

While the downturn in the construction industry has hit timber prices because there is reduced demand for coniferous standing sales and softwood sawlogs as many sawmills and processors reduce capacity.

Although this may affect the value of mature woodlands with immediate fellings, the prospects for younger woodlands remains optimistic. And sterling's weakness is making imported timber more expensive while there is some benefit for pulp wood exports to Scandinavia and Finland.

The 2008 figures also show a rise in value of smaller woodlands with the ten woodlands sold in the smallest categories up 57pc from last year, selling for an average value of L200,000. Demand here remains intense with prices highest for woodlands close to centres of population and with high amenity value.

“We approach 2009 with an air of optimism about land ownership and timber as a commodity,” said Ewan Berkeley, of Savills. “Capital growth, together with inheritance tax mitigation, remains the primary reason for woodland purchase. Though it is expected to be a cautious market in 2009, good buying opportunities will exist, but careful evaluation is required before making a purchase.”