Forestry market in flux with further price falls

The area of commercial forestry sales and average prices have both fallen further over the past 12 months, according to the UK Forestry Market Report 2024 from Tilhill Forestry and Goldcrest Land & Forestry Group.

The report tracks plantation deals between 1 September 2023 and 31 August 2024.

There was a 55% slump in the value of listings across the UK, while average values per stocked hectare fell 18% to £18,600/ha.

See also: Private nature funding for farmers

“We were surprised to see another significant negative move in the pricing of agreed deals,” says Xander Mahony, head of forestry investment at Tilhill.

However, he warns against jumping to conclusions based on year-on-year comparisons.

“Last year’s data included one deal at a valuation that now seems unimaginably high. Adjusting for outliers takes the change down to 8%,” he says.

An unusually high proportion of properties in northern Scotland, which typically achieve lower values due to their distance from timber markets, also depressed values this year, Xander adds.

Beyond location, the proportion of Sitka spruce in plantations was the most critical variable for explaining asking prices, explains Xander.

“This suggests a focus on returns from highly productive assets.”

According to the Forestry Commission’s Timber Price Index, the drop in average forestry prices has coincided with a slight fall in timber values over the past two years.

But prices could pick up if the government starts building the 1.5m new houses it has promised in the next five years. 

Jon Lambert, a partner at Goldcrest, says: “There is a lot of cash out there, but buyers are somewhat cautious and selective.

“Hesitant investors, institutions with less money than they had 18 months ago, and low timber prices provide a wonderful opportunity for decisive, well-funded investors.”

Investors will also have more choice in 2025 with a number of large properties due to be launched soon.

Planting land

When it comes to land sold for tree planting, as opposed to established plantations, the market is also mixed (see “Planting land prices”).

Prices virtually flatlined in Scotland, rose by more than 25% in Wales, but fell by 13% in England.

“The ability to secure planting consents has become increasingly challenging,” says Jon. “The heat has come out of the market, but demand definitely still outstrips supply.”