COMMERCIAL forestry values fell for the first time in almost a decade, according to a new industry report launched this week. 

The UK Forest Market Report 2023 found there had been a 10 to 20 per cent fall between September 2022 and August 2023, with buyers increasingly cautious amid a slump in demand for timber and external factors such as the war in Ukraine. 

While 2023 saw £212 million of commercial forestry listings on the open market, up nine per cent, two properties alone accounted for 70 per cent of the total value listed for sale. Scotland once again enjoyed the lion's share of the market (91 per cent), with the number of listings falling 39 per cent to just 35 properties.

The report said: “Compared to the rampaging run of forestry as an asset class over the last 17 years, the lagging effect of economic turmoil from the mini budget, the war in Ukraine, and rising interest rates have softened market activity across the board in both afforestation and commercial/amenity woodlands.”

Xander Mahony, head of forestry investment at Tilhill, said: “This continues the £200 million observed market size trend into a fourth year. The headline number, however, is boosted by two huge assets (Griffin in Perthshire and Glen Shira in Argyll) and flatters a market that was otherwise unusually small.”

Jon Lambert, partner at Goldcrest, said that most properties brought to the market had still sold but that after a “staggering” run, pricing was down 10-20 per cent depending on quality and location. 

He said: “Purchasers are generally more cautious than 12 or 18 months ago, leading to longer due diligence periods, an increased demand to rectify ‘blemishes’ before completion and a desire for higher yields.”

He highlighted a continuing demand for good-quality planting land, but said appropriate sites were hard to find. The total value of planting land listings amounted to £49.9 m, down 24 per cent.

In Scotland, average prices for planting land suitable for commercial forestry dropped 22 per cent from £12,800 per gross hectare to £9,900 per gross hectare “in the most significant development across all forest market data this year”. England and Wales fared better, increasing 42 per cent to £16,600 per gross hectare and £13,400 per gross hectare respectively.

It was hoped, according to the report, that a “normalisation in commercial planting land prices in Scotland would spur much needed woodland creation, both commercial and native” going forward.

Just 13,000 hectares of trees were planted this year, a drop of seven per cent and 43 per cent of the national target of 30,000 hectares. While Scotland continued to lead the charge with 8,200 hectares planted – more than two thirds of which were conifers – this was a 27 per cent drop from 10,400ha in 2022. Broadleaf planting amounted to 51 per cent of all UK tree planting.

The report found that land listed for sale which could offer natural capital potential reached a massive £276 m, up 241 per cent, dwarfing the land suitable for commercial forestry. 

England had the biggest market by value with £144.5 m while Scotland had the most land available with 13,394 hectares. Prices were highest in Wales at £17,000 per hectare.

Mixed woodland listings were down 18 per cent at £15.8 m with a 14 per cent fall in average price to £12,500 per hectare. England, while marked by a 45 per cent fall in total value and a 48 per cent drop in total area, saw a rise in the number of listings (16) and a modest 5 per cent rise in average value to £17,300 per hectare. In Wales, listings rose from three to 10. Average woodland values remained almost static in Scotland and Wales at £9,500 per hectare and £9,600 per hectare respectively.

Forestry Journal: Xander Mahony, right, at the launch of last year's market report Xander Mahony, right, at the launch of last year's market report (Image: FJ)

Launched at the London WWT Wetlands Centre this week at an event chaired by Mark Prentice, head of private banking at Hampden & Co, the report called for the sector to work together to change public attitude to Sitka spruce.

“It is, after all, the industry’s commercial crop and the workhorse of our timber industry,” the report said. “Given the urgent need to grow more UK timber – and meet climate mitigation obligations – we must address how the timber industry can make Sitka spruce more palatable.”

The UK Forest Market Report 2023  was produced by Tilhill – one of the UK’s leading forestry services company – and specialist forestry agency GOLDCREST Land & Forestry Group.