2021 saw extraordinary growth in the commercial forestry sector, with the average price per net productive hectare rising by just over 60 per cent across Great Britain. The catalysts for this remarkable growth were strong timber prices alongside an increased sense of urgency surrounding climate change and biodiversity loss.

Although at the time of writing it is too early to know about every sale completed during the 2022 forest year (1 October 2021–30 September 2022), preliminary research shows there has been a slowdown compared with the average value growth witnessed last year, and indeed single figure percentage growth for the first time in six years.

Some of this is to do with buyers taking a more cautious approach to investment in the knowledge valuations are currently high, but also a large amount of capital has been deployed in the past year. Alongside this there are concerns around the wider economy and war in Europe which undoubtedly have influenced sentiment for much of 2022.

The good news for investors is that prices did continue to rise, albeit more modestly, in times of uncertainty which shows the long-term defensive nature of forestry is still prevalent.

Values

According to Savills database of forest sales, the average net productive value increased by 7.5 per cent across England, Wales and Scotland to around £26,400 per hectare. It’s important to note there can be huge variances in price dependent on region, quality and size of the forest. Additionally, the forest market is a small sample, perhaps only 60 to 80 properties trading a year, therefore these factors can influence the overall average price considerably.

Regionally

Historically, North Scotland may have been seen as less attractive by investors, but this year the region has witnessed significant value growth. Although the values still remain comparatively low at an average of £16,400 per hectare, these have increased by 51 per cent when compared to the previous year, mirroring the increase the other regions experienced in 2021.

Average net values per hectare 2011-2022

^{Source: Savills Research}

Elsewhere Central and Southern Scotland, at £26,891 and £32,058 per hectare respectively, show strong positive growth and the values continue to converge. Both regions benefit from good growing conditions, good infrastructure and competitive timber markets, but the south has always been considered the primary forest investment region.

Across England and Wales provisional figures for the 2022 harvest year show reduced supply with around half the number of hectares marketed compared to the same period in 2021. More property has come to the market recently, but will sell in the next forest year, and 2022 looks like flat or slightly negative value growth, albeit the few large commercial sales have been at good prices.  

Quality

The higher quality commercial forest properties are experiencing intense competition in the markets, and our research shows a willingness from investors to pay a premium for quality.

Provisional 2022 regional quality averages

^{Source: Savills Research}

Plot size

Analysis of our data on the size of forest traded this year also indicates a widening gap in average values, with the larger scale commercial forestry properties achieving higher average values than the smaller parcels, which have been slower to sell during 2022. Smaller commercial forests are not typically purchased by institutional investors, other than where there is a specific investment reason to do so, for instance a neighbouring property.

Plot size and average values

Further information

Contact Jamie Adamson or George Marffy

Savills Rural