UK Brexit Forestry Resurgence

August 15, 2016

UK Brexit Forestry Resurgence

It was reported in the UK’s Farmers Weekly on 5th August that there has been a resurgence in firewood and timber prices which has led to heightened interest by investors in UK woodland and forestry.

Strong timber prices have increased investor interest in farm woodlands in the UK. Commercial forest owners have seen their asset value rise exponentially in the past 10 years and some woodland deemed unworthy of maintenance is now financially viable again. According to Jason Beedell, research partner at Strutt & Parker “Forestry has made a total return of 18.4% a year in the past decade. To put that in to context, UK rural property made a return of 11.3%, residential market lets produced 9.2% and commercial property was 5.7%. Most of that return has been driven by capital growth.”

Standing prices of hardwood for firewood and conifer prices for saw log have also increased significantly over the past decade.

Fenning Welstead, partner at John Clegg & Co stated that the value of woodland forestry has grown from £2,000/ha to £8,000/ha over the past decade and that from 2002 to 2008 there was a realisation that UK woodlands were undervalued. Following the financial crash in 2008 which led to investors rushing to real assets at the same time as a weaker pound made UK timber more valuable. He continued that a similar “rush to quality” is expected post-Brexit, and that there are already indications of increased interest. “Arguably there has been stronger interest from continental purchasers whose euros now buys more pounds.”  Plots of woodland throughout Scotland are also selling well and can command between £1,000/acre and £5,000/acre depending on age, species and location.

The appetite for woodland is extremely high in the south east of England and Mark Barrow, chartered surveyor at H&H Land and Property in Kendal, said: “In the past five years, the value of woodland has increased by around 50%.”