With Scotland’s commercial forestry property sales experiencing a substantial downturn in 2023 due to quality variations and economic factors, Jon Lambert of Goldcrest Land is now pushing for a renewed focus on the production of timber

The annual Goldcrest-Tilhill collaboration on the Forestry Special Report provides a market commentary on the deals and listings of sales of commercial forestry properties through 2023. 

As Jon Lambert, Goldcrest Land and Forestry Group founding partner explains, the figures for 2023 show a drop of between 10 and 20 per cent in the total sales of woodland properties, by comparison with the 2022 figures. 

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However, he points out that comparing the two years is not without its complications. “There is reason to believe that we are not actually comparing apples with apples,” he comments.

For reasons that are not clear, a good percentage of the woodlands that came up for sale through 2023 turned out to be of poorer quality than was the case in 2022. 

There is no underlying, mysterious reason for this. It’s just the way things turned out. Another complicating factor, Lambert suggests, is that some of the prices that certain woodland properties went at look, upon further scrutiny, to have been rather low. 

“You could say either that the buyers got really lucky, or that the sellers lost out. In my considered judgement, those properties were worth more than they fetched. This happens sometimes,” he comments. 

However, taken as a whole, Lambert is ready to concede that the market has fallen back a bit in 2023. In part the blame for this can be laid at the door of high inflation and high interest rates. 

In fact, the total value of forestry listings in 2023 would have been very significantly lower were it not for the inclusion of two very large estates. 

The corollary of this is that the total number of forest properties listed fell 39%, year over year, to just 35 properties. 

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“Since Q3 last year both interest rates and inflation have been at levels that we have not seen for at least three decades. With high inflation, investors want to see much greater returns on their investments. At the same time, we are going through a period of depressed prices for mature timber. This is partially due to falling demand in the UK construction and house building sectors,” Lambert comments.

However, he is confident that the future of the forestry sector continues to look bright.  The UK continues to have a tremendous appetite for timber and we continue to be the third largest importer of timber in the world, after the US and China – both of which are vastly larger economies than the UK. 

“We import 81% of our timber and, given the fact that there is a tremendous and growing global demand for timber, that is not a comfortable position for us. 

“We need to increase the volume of domestically produced timber but in Scotland, and in the UK in general, we are missing our annual planting targets,” he says. Lambert points out that the global market for timber is bound to get even tighter over time. 

“As developing countries grow, the demand for quality housing increases. That creates demands for more timber. At the same time, the fight against climate change is putting pressure on construction, globally. The trend is moving away from using concrete and steel, which are heavy emitters of greenhouse gasses, to using timber, which locks up carbon,” he comments.

One of the big problems with creating more new woodlands is the scarcity of available land. 

“We are often accused, in the forestry sector, of wanting to take over good agricultural land to plant trees. This is nonsense. We are actually not allowed to plant new forests on agricultural land that ranks as grades one to three. We look at grades four to six as being ideal for new woodlands,” he says.

As Lambert explains, in England, Wales and Scotland, there are great swathes of grade three and grade four  land, mid-hilltop land and higher, that are actually very poor for agriculture. 

“These mid-hilltop lands are farmed with small numbers of sheep and barely break even despite significant agricultural subsidies. The subsidy regime in the UK is in the process of being changed and when this happens, those lands will be clearly loss-making. We are talking to farmers all the time about the considerable benefits that could accrue to them, over time, of utilising that land for forestry,” he comments. 

In Scotland, average prices for planting land suitable for commercial forestry dropped 22% from £12,800 per gross hectare to £9,900 per gross hectare “in the most significant development across all forest market data this year”. 

England and Wales fared better, increasing 42% to £16,600 per gross hectare and £13,400 per gross hectare respectively.

The sector had been looking forward to a “normalisation in commercial planting land prices in Scotland, which could then spur a much-needed woodland creation of both commercial and native woodlands going forward.

In fact, in the whole of 2023, just 13,000 hectares of trees were planted. This was a drop of 7% year over year and resulted in just 43% of the national target of 30,000 hectares being achieved.

While Scotland continued to lead the charge with 8,200 hectares planted – more than two-thirds of which were conifers – this was a 27% drop from the 10,400 hectares planted in 2022. Broadleaf planting amounted to 51% of all UK tree planting.