In recent years there has been a growing and increasing interest in investment in forestry. Forestry is now a proven asset class for investment and is widely acknowledged as a staple element of investment portfolios adding diversity and reliability. In January 2013, Money Week magazine reported that “timber is the only low risk, high return investment.” Forestry contributed 2.2 billion to the Irish economy in 2012 and is a growing industry.
Forestry investment can be highly tax efficient and is well suited for the long-term investor seeking a stable asset backed investment. The combination of value in a naturally growing commodity and the security of ownership of the underlying land provides investors with a low risk asset providing long term capital appreciation in a sustainable and tax efficient manner.
Forestry as an investment offers a number of unique advantages:
a) Low risk
b) Land based asset
c) Less volatility than other assets
d) Capital appreciation even in recession
e) Competitive returns
f) Timing of harvest flexible
Forestry investment is recognised worldwide as having low volatility in comparison with other asset classes as is evidenced by forestry investments being relatively unaffected by the tumultuous changes in financial markets in recent years. Timber is a global traded commodity and investment in forestry reflects this global aspect. Forestry investment has shown that it can deliver competitive rates of return over and above inflation of the order of 5-10% across a range of markets and geographic locations.
Internal Rate of Return from Forestry Investment
Greenwood Management Aps. Forestry and Timberlands Investments 2011.
Timberland Investment Resources Europe. http://www.tireurope.com/index.php