Commercial forestry values look set to see an increase this year, with levels of activity starting to pick up, according to the latest analysis from forestry and woodland specialists John Clegg & Co.
According to the company’s latest Forest Market Review, the outlook for the sector looks broadly positive, with strong demand for good quality commercial forests from a wide range of investors.
“The story of commercial forestry in 2023 does take some unpicking,” said Simon Hart, head of Forestry in Scotland at John Clegg & Co.
“At first glance, the market looks to have cooled significantly as only 2,200 stocked hectares – with a combined price of £45.5 million – were sold during the year.
“This compares with 10,500/stocked ha, with a combined value of £219 million, in 2022. However, two large woods, with a total area of 7,600ha and a combined asking price of £159 million were launched during 2023, and both are now understood to be under offer.
“If these deals had concluded during the year this would have pushed both the total area and level of investment back to similar levels to last year,” Hart explained.
Forestry values
The head of Forestry in Scotland said that higher interest rates might have led to the expectation of a decline in commercial forestry plantation values.
He added that the analysis shows that “commercial forests sold for an average of £21,000/stocked ha, which is 1% higher than during 2022 and 45% higher than in 2020. It backs up the prediction we made in last year’s Review, that many see forestry as a useful hedge against inflation and therefore it remains an attractive asset”.
Head of Forestry and Nature Capital for John Clegg & Co, Alex Brearley, highlighted the fact that higher interest rates and flat timber prices made buyers more cautious than they were two years ago.
Brearley said: “Globally, demand for timber is also forecast to increase substantially as timber usage expands in response to efforts to decarbonise the built environment.
“The UK governments all have expansionist forestry policies, and we see no reason for the anticipated general election to have much of an impact on the sector as support for tree planting and woodland management is pretty consistent across all parties.
“Although, the Scottish government’s recent decision to cut the planting budget available for 2025/24 is clearly a blow, and means failure to meet its own planting targets is now effectively baked into the Scottish system.”
