Working out what a woodland is worth The value of woodland varies widely across the UK. Philippa Cliﬀ explains some of the factors involved.
ultimately better quality and higher volume of timber coming out of the plantation at maturity. Altitude and aspect will also aﬀect growth and quality. Timber mensuration data is collected during a valuation inspection to help guide the valuer as to growth rates and standing volume.
IN ReceNt times, investment in forestry has seen a seismic rise in popularity.
Established investors are competing with new entrants to secure the limited supply of forests coming to the market. So what makes a good forestry investment, and what factors inﬂuence value in the forestry sector?
commercial woodlands Commercial woodlands dominate the woodland sales market. Compared to native woodlands, commercial plantations oﬀer an opportunity for future income via thinning and felling. Woodlands that are managed commercially also oﬀer signiﬁcant tax advantages, including any proﬁt made being tax free, and any gains on the value of the timber being exempt from capital gains tax. Providing a commercial woodland has been owned for two years or more, it can be inherited free of inheritance tax by using business property relief. Coupled with the current strong timber market, these reliefs add to the appeal of commercial forestry.
Species composition Not all commercial woodlands have the same value. The species composition of the forest is critical. In Scotland, the strongest demand from mills tends to be for Sitka spruce. However, with pests and diseases in mind, it is sensible to have a degree of diversity in a woodland, so a proportion of redwoods such as Scots pine and Douglas ﬁr can be advantageous. At the other end of the market, Lodgepole pine has traditionally been viewed as being of lower value, but increasing investment from processors and a subsequent rise in demand, mean even Lodgepole pine dominated properties have secured a place in the market.
Soil type Soil type is critical to the productivity of a woodland, providing trees with water, nutrients and root anchorage. Soil pH also inﬂuences growth, the ideal range being 5.5 to 6.5. Soil structure is also important in relation to water holding capacity and ideally the pore space in soil should be 50% air and 50% water. It is impractical for a valuer to test soils to this level, but much of Scotland’s soils have been mapped in detail and data is available online or from incumbent forest managers. Soil types vary hugely across Scotland, which is one reason why we see such huge variation between plantation values from South to North. Better soils result in a better yield class and
Shipping a 750-tonne crop of timber by sea rather than overland on fragile roads proved to have many advantages. Willie Beattie reports.
As well as the science behind species choice and soil type, practical issues can have a signiﬁcant eﬀect on value. Access and haulage routes are vital, both within the woodland and on public roads. Public routes leading to forests are generally categorised either as agreed routes, consultation routes, severely restricted routes or excluded routes by the Timber Transport Forum and the local authority. Any water crossings internally or on public roads can also inﬂuence value depending on bridge availability and weight limits.
Pests and diseases A number of pests and diseases have troubled the forestry industry in recent years. Well-known culprits include dothistroma needle blight, pinewood nematode and phytophthora ramorum to name but a few. Valuers will look for evidence of disease, and make valuation adjustments accordingly.
Native woodlands Although commercial woodlands dominate the market, there is growing interest in the amenity and conservation beneﬁts of native woodlands. Native woodlands tend to be of lower value than their commercial counterparts, due to their reduced potential for thinning and felling income, but nonetheless can command strong values especially when packaged with residential, sporting or lifestyle opportunities. Native woodlands are less likely to be aﬀected by access and haulage limitations.
Bare land values The value of bare land for woodland creation has soared in recent years thanks to rising worldwide demand for timber and new planting grants, Again, the value is aﬀected by the type of forestry it will support. Reference will then be made to the grant income available, coupled with any future harvesting income from the plantation itself. The advent of the Woodland Carbon Code oﬀers an additional avenue for revenue, both for commercial and native woods. It has been said before that valuation is an art and not a science, and experience plays a large part in accurately determining value. The popularity of forestry as an investment is growing, and therefore accurate valuations are more important than ever to support this burgeoning industry and give purchasers comfort in their acquisitions.
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Page 12 | Forestry matters | Summer 2019 | galbraithgroup.com
Loading in progress at Kinlochbervie harbour.
News and Insight from the Forestry Industry