Prices for UK commercial woodland up 20% in two years, now selling for £1,500-£5,000/acre, on strong interest from private investors and bright prospects for timber markets, says forest and woodland specialist

Audrey Dixon

Audrey Dixon

Nov 15, 2012 – Industry Intelligence Inc.

LOS ANGELES , November 15, 2012 () –

Commercial woodland prices continue to move up in the U.K. because of strong interest from private investors and a bullish forecast for timber, according to a U.K. forest and timber specialist, reported Farmers Weekly on Nov. 14.

Woodland values are up about 20% in two years and now stand at £1,500 (US$2,378) to £5,000 per acre, depending on the parcel size, location, timber volume, thinning practices, and point in the rotation, said John Clegg, of John Clegg & Co. in Buckingham, England.

This is true mainly for Sitka spruce in Scotland, northern England and Wales, said Clegg. The yield on commercial woodland might be as low as 1% during rotation compared with 4% -6% a few years ago, he said, Farmers Weekly reported.

However, investors are mostly interested in long-term capital appreciation, said Clegg. Most of them are looking for a safe haven for their money, and moving into forestry requires less capital than investing in agricultural land, he said.

Commercial woodlands also have tax advantages for investors. After two years of ownership, there is 100% business property tax relief on inheritance tax, no income tax on timber sales, and capital gains tax only on the underlying land, reported Farmers Weekly.

Prices for commercial timber have held up well through the recession and the outlook remains good largely based on global demand, said Clegg. The expectation is that timber values can only increase when the economy improves, he added.

Most investors in commercial woodlands are looking to hold on to their investments for the long-term, said Clegg, Farmers Weekly reported.

The primary source of this article is Farmers Weekly, Sutton, England, on Nov. 14, 2012.

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