2022 showed us how quickly market confidence, economic drivers such as interest rates and consequently asset prices can all change, but our outlook is one of cautious optimism.
We continue to see an intrinsic link between timber prices and plantation values, and demand for good quality existing plantations remains as strong as ever.
It is anticipated that timber prices will rise slightly in 2023, supporting the returns that plantations can generate from timber sales and bolstering confidence in plantations as an asset class.
There is an abundance of buyers looking for commercial plantations, in a market lacking supply. Our experience with buyers and sellers makes us believe that this trend will continue and we expect this will lead to competitive prices being paid.
Meanwhile, the natural capital/carbon market remains strong with a variety of buyers looking at native woodland and peat restoration as a means of delivering carbon credits. A number of extensive sporting estates have been bought by charities looking at a range of environmental activities, but underpinned by carbon sequestration as the key metric. These projects alone will lead to many thousands of hectares of new native woodland creation.
In summary, there is more caution in the market than for many years. Lower timber prices, higher interest rates and inflation all mean buyers are being more selective. However, there is still a lot of capital interested in forestry investment and activity levels remain high. Wider market and political uncertainty persist and, as ever, landowners and investors would be prudent to take advice in order to capitalise on the opportunities that undoubtedly exist in the current market.
To read the full 2022 Forest Market Review from John Clegg & Co, part of Strutt & Parker, click here or contact the John Clegg & Co team for further information on forestry, management or investment.
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