MORE than £111 million of forestry was sold in the UK in the past year, 40 per cent more than in 2016, according to the latest annual UK Forest Market report by Tilhill Forestry and John Clegg & Co.
The report contains many key highlights based on information obtained from the sales of commercial forest properties between October 1 2016 and September 30 2017. It reports that the market returned to its normal growth after a quieter year in 2016 with 87 forest properties sold - compared to 67 the previous year - for a total of £111.04m, up £31.8m from 2016 and against a five-year average of £104m a year.
Other highlights reveal that a total of 17,272 hectares were traded, 78 per cent of which were in Scotland, underlining the country's dominant position in the commercial forestry marketplace. Forestry in England amounted to 18 per cent of the market while the Welsh share was 4 per cent.
The report highlights the demand for farmland with potential for new planting schemes and underlines the fact that the future fortunes of farming "in the changing world of Brexit and generational succession will have a significant impacts on forestry".
Fenning Welstead, Partner in John Clegg & Co's Edinburgh office said: "There is a move towards exciting new afforestation programmes with positive support from grants and political will. Potentially, significant opportunity for afforestation may result from existing farmland owners planting parts of their land or from changed ownership to forestry investors."
The report reveals that the industry is in good shape with annualised returns of 10.7 per cent and continues to outperform most other asset classes - despite a fall from the 10-year annualised rate of 17.4 per cent.
Peter Whitfield, Tillhill Forestry's business development director, states in the report: "We have been encouraged to see a steady flow of new investors into the market attracted by the good returns, the potential for tax planning and/or long-term capital growth, and frequently just a genuine enthusiasm for getting involved in forestry."
Fenning Welstead added: "Large scale commercial plantations have been in strong demand, but the supply of such properties is decreasing. With some notable exceptions, none have been established for almost 30 years. Many of the larger private plantations are now in the ownership of collective funds and portfolios. Whether they will come to the open market again is debatable and these funds continue to seek further acquisitions. There have been some very strong sales this year as a result."
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