Counter cyclical: “Forestry is the only asset class in existence that has risen in three out of the four market collapses of the 20th century” Moneyweek
Low risk: Timber has risen steadily in price for 200 years and has returned an average of 6.5% a year for the last century. Forestry investments offer steady, stable increases with predictably high returns and as they are not correlated to the volatile stock market they do not suffer from unpredictable peaks and troughs.
Increasing demand: Like all commodities, global demand for timber is ever increasing. This market will never be saturated. According to the UN the demand for timber is projected to double by the mid part of the century – therefore this will inevitably have a positive effect on commodity prices. China and India have a hugely increasing demand as their population grows. In addition, an increase in bio-energy projects especially in the western world increases the demand for timber.
Tax relief: There is no income, capital gains or inheritance tax on woodland.
An ethical investment: People are increasingly concerned about deforestation – one tenth of global forest has disappeared in the last 25 years. Investing in Timber is an ethical one, protecting the world’s rainforest, and in return Investors can enjoy having a clear conscience.
Timber prices stay high: As the stock in Brazil is utilised in India timber prices are not altered by the increase in cheap timber in the UK from Scandinavia and Baltic states. Having said this, it is becoming increasingly expensive to get trees from Eastern Europe due to cost of transport and lack of easy to get to trees.