Fewer transactions took place during the 2023 forest year (1 October 2022 – 30 September 2023) and this fall in activity led to a market contraction by volume and value – the first since 2019.
The UK forestry investment sector was not insulated from the well reported economic and fiscal challenges and during the 2023 forest year weakened investor confidence led to a -68% market contraction compared with the stellar performance of the 2022-forest year, when just over £300 million of UK forestry transacted. Savills publication Spotlight: The UK forestry market states that just under £96 million transacted during the 2023 forest year, the lowest total value of commercial forestry sold since 2016.
“One of the attributes making forestry attractive as an investment is the defensive nature of timber as a store of value, so it quite likely we have witnessed a pause rather than a change of course in the direction of performance,” says James Adamson Savills head of Forestry Investment UK
Between 2014 and 2023 the average gross value of commercial forestry increased by 220% to £18,500 per hectare but decreased by -8% per hectare during 2023.
Also over the medium to long term UK commercial forestry has consistently outperformed other asset classes.
On a regional basis, for the third successive year Central Scotland recorded the highest number of forest hectares sold. However, in England the number of forest hectares sold increased by 84% compared to 2022, albeit the market is small.