Net zero calls prompt surge in forestry values
Commercial forestry values have escalated by at least 15% in the past year, according to an industry report launched in Edinburgh today.
Increasing demand for timber assets driven by net zero ambitions contributed to rising prices in a market characterised by fewer, smaller, but higher value sales.
This developed as Scotland “spearheaded the charge for economic forestry” with an 84% share of UK commercial forestry sales.
Meanwhile, the land available for natural capital projects including native afforestation, peatland restoration and rewilding also trebled over the past year, a sector led by England.
The UK Forest Market Report 2022, the most comprehensive review of the market, has been produced by Tilhill – the UK’s leading woodland creation, forest management and timber harvesting company – and specialist forestry firm Goldcrest Land & Forestry Group.
The report estimated the market was worth well over £200m – taking into account a considerable number of off-market sales on top of the £195m monitored by the two firms – and continues to offer an exceptional outlook for investors.
Greater awareness of the benefits of broader natural capital increased interest in opportunities offering wetland, islands and other diversity, said the report.
The focus on nature-based solutions beyond timber revealed far more land suitable for these projects, swelling to £80.7m (from £26.4m in 2021) based on the data monitored.
The report said the incentive to protect and replenish natural capital stocks and the appetite for natural services from carbon removal to biodiversity net gain meant forestry and afforestation offered the “ideal entry points for investors looking to enter the land-based sustainable investment space”.
Meanwhile, limited supply and the sale of a handful of premium forests in the south of Scotland saw the average value of commercial forestry rise by an estimated 15% over the year. However, the report noted that there were some outstanding “outliers” that achieved sale prices well above this curve.
Fenning Welstead, partner at Goldcrest Land & Forestry Group, said: “A future with much greater emphasis on renewable energy and raw materials will surely have to rely more on trees. Whatever the vicissitudes along the way the future of human activity will need more timber. We must keep planting.”