OPEN DAY ! 25th APRIL 10:30am - 6:00pm www . farmingmonthly . co . uk April 2018 | Farming Monthly | 39
The UK forestry market posts another year of strong performance
Despite general uncertainty in the property world surrounding the potential effects of Brexit , the UK forestry market continues to demonstrate a degree of resilience and posted another year of strong performance , according to latest findings published in Savills Spotlight on the UK Forestry Market .
D uring the 2017 forest year the total value of the forestry investment market increased by 24 % to over £ 112 million compared with around £ 90 million in 2016 . The value of forestry transacted during 2017 was 25 % higher than the medium term average , although significantly lower than the £ 146 million in 2015 .
Despite this large increase in the overall value of the market , the total area of forestry sold across the UK actually fell to just over 18,000 hectares during 2017 representing a reduction of -8% on the 2016 forest year , but was in line with the medium term average . Contraction of the market area , coupled with an increase in the overall value traded , resulted in rising average values .
Domestic timber is underpinning the forestry market and continues to drive value in the forest property sector , supported by a weaker sterling and the increasing demand for wood in biomass and construction ,
Savills research reveals average productive values across the UK rose by 20 % to £ 9,300 per hectare . This significant growth follows a fall in average values during the previous year , although in 2016 this was largely due to the location of properties traded with over 80 % north of the Forth-Clyde canal .
In 2017 gross values grew by 19 % to £ 7,300 per hectare . On average productive values were 27 % higher than the average gross value and the average unproductive area was 32 % per property .
James Adamson , Savills Head of Forestry Investment said : “ A sustained period of low interest rates has stimulated the UK Forestry investment market , driving cash holding investors to look for alternatives . Forest ownership is perceived as straightforward , long-term and low risk in uncertain times . Our research tells us that , cash on deposit would have accumulated 19 % in value before tax since the financial crisis of 2008 : meanwhile tree growing on a hill in South Scotland would have accumulated 35 % over the same time . Throw in the inflationary growth in capital market value and the performance is boosted to over 80 %.
“ New planting remains an area of focus . 2017 saw some progress in England , and Scotland is now beginning to reap the benefit of strong Government support and a keen industry , however there is still much to be done in this sector and the availability of physically suitable land at an appropriate price remains the biggest challenge .”
| Forestry
OPEN DAY ! 25th APRIL 10:30am - 6:00pm www . farmingmonthly . co . uk April 2018 | Farming Monthly | 39