What are the forestry investment credentials?
Timber is a globally traded commodity, with demand closely linked to GDP. The UK imports around 80% of its timber requirements, providing large, secure domestic markets, where demand consistently exceeds home grown supply. The World Bank forecasts that timber demand will quadruple by 2050, with sustainable supply outstripping sustainable timber production¹. Within the UK, industry body, Confor, estimates that timber demand could increase by 78 per cent by 2050, if demand grows at the same pace as in the last ten years².
What does forestry investment look like?
UK forestry investment is based on growing trees that can be sold as products that society wants and needs.
This typically means planting conifer dominated forests, growing timber for construction material such as joists and wall partitions, engineered wood products (chipboard for flooring), pallets for transportation and pulp for cardboard and paper.
In recent years, society has looked to the forestry sector to deliver more than timber, as a central part of tackling the climate change and biodiversity emergencies. Bold targets for new native woodland aim to improve biodiversity and deliver carbon sequestration benefits, while new commercial woodlands are to be planted for carbon sequestration and production of timber products to de-carbonise the property and construction sector (one of the UK’s largest generators of carbon dioxide).
The UK forestry sector is one of the most modern and well-regulated in the world, under the UK Forestry Standard, ensuring high-integrity management through the delivery of social, economic and environmental benefits alongside timber production.
Investors typically own the forest, including underlying land, and in addition to the long-established market for growing timber, forest owners can also generate carbon units from eligible land and are increasingly benefitting from delivering diversified land use by integrating renewable energy generation into operational forests.
Ownership rights allow investors significant control and influence over the management of their forestry asset.
The Bidwells forestry team has more than 40 years experience with its team of Chartered Foresters and Surveyors delivering a wide spectrum of professional services. Whether managing a large-scale commercial portfolio, delivering large-scale afforestation, or valuing and selling forest property, Bidwells has a strong track record as a truly independent advisor in an increasingly integrated sector.
How are returns generated?
- Capital appreciation from biological growth: Irrespective of wider market factors, trees grow and become more valuable as they increase in volume. Typically, commercial species growing in the UK today will grow in volume by between 2% & 4% per year.
- Income from the sale of forest timber: Trees are felled as they become mature and are of a volume, nature, and quality required by the timber processing sector.
- Capital appreciation of underlying land: The appreciation of the land on which trees are growing changes with market factors but is fundamentally underpinned by its productive capacity.
What is needed?
Professional independent technical advice (a forester): Bidwells offers truly independent advice and management in a sector heavily consolidated with vertical integration of advisors, materials suppliers, contractors, and timber end-users.
Appropriate legal advice: Land & forestry transaction is a specialist area of law that is devolved across the UK.
Appropriate financial & tax advice: Each investor’s circumstances are unique and must be understood to maximise the potential of an investment.
