MORE than £111m of forestry was sold in the past year – 40 per cent more than in 2016 – according to the latest edition of the UK Forest Market Report.

Tilhill Forestry and John Clegg & Co report on a buoyant market characterised by high-value properties and portfolios, robust demand and a steady flow of new investors.

Launched in London on Wednesday, the report covers the sales of commercial forests between October 1, 2016, and September 30, 2017.

It said the market returned to its normal growth after a quieter 2016 with 87 forest properties sold – compared to 67 the previous year – for a total of £111.04m, up £31.8m from 2016 and against a five-year average of £104m a year.

A total of 17,272 hectares were traded, 78 per cent of which were in Scotland, underlining the country’s dominant position in the commercial forestry marketplace. Forestry in England amounted to 18 per cent of the market, while the Welsh share was four per cent.

The report confirmed the industry is in good shape with annualised returns of 10.7 per cent. It continues to outperform most other asset classes – despite a fall from the ten-year annualised rate of 17.4 per cent. It also benefits from strong political support due to the industry’s economic contribution, green credentials, carbon sequestration and biodiversity.

In the report, Peter Whitfield, Tilhill Forestry’s business development director, said: “We have been encouraged to see a steady flow of new investors into the market attracted by the good returns, the potential for tax planning and/or long-term capital growth, and frequently just a genuine enthusiasm for getting involved in forestry.”

Fenning Welstead, partner in John Clegg & Co’s Edinburgh office, said: “Large-scale commercial plantations have been in strong demand but the supply of such properties is decreasing. With some notable exceptions, none have been established for almost 30 years.

“Many of the larger private plantations are now in the ownership of collective funds and portfolios. Whether they will come to the open market again is debatable and these funds continue to seek further acquisitions. There have been some very strong sales this year as a result.”

The report highlighted the demand for farmland with potential for new planting schemes and underlines the fact that the future fortunes of farming “in the changing world of Brexit and generational succession will have a significant impact on forestry”.

Mr Welstead said: “There is a move towards exciting new afforestation programmes with positive support from grants and political will. Potentially, significant opportunity for afforestation may result either from existing farmland owners planting parts of their land or from changed ownership to forestry investors.”

He said: “The forestry industry is in good shape but much needs to be done to safeguard it for the future. We need to engage in afforestation and we need to promote an understanding of the need to plant trees.”