The forestry investment market 2024

Following a decade of exceptional growth to 2022, the commercial forestry market was quieter during 2023 and 2024 – leading to a softening in average values

Over the 10 years to 2022, commercial forest returns saw exceptional growth. The traditional benefits of forestry ownership – such as the increased demand for timber, the wider advantages of diversifying into a tangible asset and the long-term resilience of the asset – continued to attract investment.

Since 2019, the growing interest in sustainable investing and the pressure on forestry to provide climate and biodiversity outcomes also significantly influenced and increased prices paid. Due to strong competition, values increased at an unparalleled rate during 2021, and peaked in 2022. Since then, there has been a fall in the average value of timber properties due to weaker demand during 2023 and 2024.

Total market – area and value

Our research into the UK commercial forestry market is based on our database of all forest sales over 50 hectares – including, where we are aware, off-market transactions.

During the 2024 forest year, the total value of UK forestry transactions rose by 3% to just under £103.8 million. This compares favourably to £100.7 million traded during the 2023 forest year, but is still lower than the 10-year average of £157 million (Figure 1).

Just over 8,100 hectares of commercial forestry were sold across the UK during the 2024 forest year. This compares to 7,500 hectares traded during 2023 and represents a rise of 9%, but is still significantly lower than the 10-year average of 16,000 hectares.

The fall in 2024’s overall market value, compared to the 10-year average, correlates to the smaller area traded and the softening in the average value. Triggers for the fall stem from the September 2022 mini-budget and the sudden rise in interest rates affecting the cost of capital and subsequently the return expectations in forestry and other investment markets.

Values

All forests have unproductive areas – such as tracks, rivers and lochs. It is, therefore, important to consider the value of the net productive area. During the 10 years prior to 2022, the market witnessed a gradual widening in the value of a net productive hectare compared to the value of a gross hectare – with the largest difference in 2021 (Figure 2).

Interestingly, although values peaked in 2022, the average gross value per hectare rose at a faster pace than the net productive values during that time. This pattern continued throughout 2023 and while our research indicated a fall in average values, gross values fell at a slower rate. It is possible that due to certification requirements, and the design of modern plantations, net areas are falling on average – leading to adjustments in the average gross/net ratio (see Figure 3).

The 2024 forest year saw a further fall in prices paid, with the average gross value decreasing by -11% to £15,500 per hectare, equating to a reduction of -14% to £21,600 per net productive hectare.

Regional performance

Average values per hectare provide a useful basis for trend and comparable analysis – but due to the smaller number of properties sold during 2024, caution must be taken when interpreting and comparing this year’s average values with other forests’ values. Characteristics such as location, size, access, species and age all have an impact on the value of the property and, in a falling market, it is important to consider the influence of the attributes of the properties sold before applying trends to the wider forest resource.

Scotland

During the 2024 forest year, 82% of the total area sold across the UK was in Scotland. This is consistent with the 10-year average of 88%.

In line with the previous three years, market activity was strongest in Central Scotland, accounting for 64% of the total area sold across Scotland. In contrast, the average value of commercial forestry traded in Central Scotland fell furthest by -19% to £19,600 per net productive hectare.

The area sold in South Scotland during 2024 dropped to 1,000 hectares and the average value of a net productive hectare fell by -13%. It is the lowest area traded in this region for over 10 years, which is significant given it is considered a prime area for forestry investment.

Historically, lower prices are paid in North Scotland compared to more southerly parts of the country. This is mostly due to the terrain, the location and often difficult access reducing opportunities for marketing timber. Due to the small number and variable nature of properties sold in this region during 2024, it is impractical to analyse and report averages for this period.

England

Typically, little commercial forestry is sold across England – and the 2024 forest year was no exception, with less than 700 hectares traded. However, this represents 8% of the total area sold across the UK and is marginally higher than the 10-year average of 6%. The average price paid for commercial forestry in England fell by -15% to £23,700 per net productive hectare.

Wales

The area of commercial forestry traded in Wales doubled during 2024 compared to the 2023 forest year – at just under 1,000 hectares sold, which represents 10% of all sales across the UK. Average values in Wales fell to £25,000 per net productive hectare.

Highest marketed area since 2019

Just over a quarter (28%) of all commercial forest properties were sold off-market during 2024. This is in line with the 10-year average of 25%.

During 2024, the total area of publicly marketed commercial forestry (13,000 hectares) was the highest since 2019 and considerably higher than the area of completed sales. Properties were also taking longer to sell during 2024 (Figure 4).

The year ahead

While the 2024 forestry market remained subdued, interest from potential investors grew as the year progressed. With the prospect of falling interest rates influencing decisions on the allocation of capital, along with more positive news around timber pricing, we expect some recovery in buyer interest in 2025, potentially reversing the negative pricing trends of the last 24 months.

_{Read the articles within The Forestry Market – 2025 below.}