The UK Forest Market Report 2024 – Forestry sector cautious but resilient in 2024 with species diversity key to the future

The UK forestry industry has proved resilient in 2024, despite facing economic challenges. According to The UK Forest Market Report 2024, produced by BSW Group’s Tilhill Forestry, and Goldcrest Land & Forestry Group, the market remains strong, driven by demand for high-quality assets, stable timber prices, wider natural capital projects and a positive medium-term outlook for wood being used as a substitute for high carbon materials.

The report, launched in Edinburgh on November 19^th and London on November 20^th, provides the most comprehensive overview of the UK forestry sector, detailing key financial trends, regional market insights, and emerging investment opportunities.

Market Overview: Resilience Amid Economic Shifts

In 2024, £95.4m of forestry was listed for sale in the UK, a 55% decrease on the previous year. The market numbered 44 properties with a total of 5,400 stocked hectares and an average valuation of £18,600 per hectare. Scotland continued to dominate with a 79% market share.

This year saw a drop in the pricing of agreed deals. However, an unusually high proportion of northern Scotland properties, which are typically lower in value due to the distance from core timber markets, distorted the market. When adjusted for outliers and northward skews, like-for-like valuations were close to flat, reflecting a healthy calibration after many years of steep increases. Strong demand for assets remained, despite challenging headwinds.

Investor sentiment was cautious but steady. With greater political certainty after the budget, the report forecasted plenty of opportunities in 2025, with several high-value properties expected to come to the market. In looking to the future, the report asked: “Might the new government’s drive for more construction provide both a demand for timber and have a knock-on effect of reducing the nationwide resistance to land use change?”

Planting land: A Shrinking Supply

• In Scotland, the volume of land available for sale dropped by 40% to 1,600ha, as availability of land suitable for commercial forestry continued to tighten despite sustained demand. Pricing for land has however stabilised at around £10,000 per gross hectare.
• Planting land listed in England increased 92%, to 1,600ha, and averaged £14,500 per gross hectare (13% down).
• In Wales, planting land also increased by 92%, to 1,300ha, with the average at £16,800 per gross hectare (26% up).

The heat has come out of the market but demand for planting land definitely still outstrips supply, which has been greatly reduced over the last 18 months, the report said.

Sustainability: Addressing Environmental Challenges

Good silviculture will be key to the future of the sector, said the report. While Sitka spruce remains dominant, the industry faces increasing environmental pressures, including droughts, pests, and climate change. Experts stressed the need for species diversity and improved silviculture practices to ensure long-term resilience. Effective forest management, with a focus on sustainability, resilience and biodiversity, will be essential to safeguarding the sector as climate change impacts forest health.

Carbon Credits and Natural Capital: A Growing Investment Opportunity

The market for woodland carbon is at an important juncture with the next few years potentially offering “rich opportunities”, the report noted. Projects with ecological benefits, such as biodiversity and water quality improvements, achieved 2-3 times higher prices for carbon credits than standard rates, highlighting the demand for sustainable land investments.

In England, properties with natural capital opportunities rose by 16% to £14,500 per gross hectare, potentially driven by the influence of Biodiversity Net Gain (BNG) regulations. Meanwhile, land with natural capital potential dropped 44% to £3,100 per gross hectare in Scotland (distorted by a couple of highland estates offered at relatively low prices) and rose 7% to £18,100 per gross hectare in Wales.

Timber Market: Stable Demand and Growth

The UK timber market remains stable, underpinned by a healthy appetite for small roundwood and pallet wood. Prices were steady, and timber fibre was in demand at similar rates. This ongoing demand, combined with trees’ annual growth of 5-6%, makes forestry land a valuable, inflation-resistant investment.

Expert Insights: Market Sentiment and Investment Outlook

Xander Mahony, Head of Forestry Investment at Tilhill Forestry, commented: “This year’s report shows a resilient yet evolving UK forestry sector, where, despite investor caution, there is strong demand for quality assets. Stable timber prices, recovering interest in natural capital projects, and the rise of biodiversity regulations are driving growth”.

Jon Lambert, partner at Goldcrest Land & Forestry Group, echoed this sentiment, noting that buyers were “somewhat cautious and selective”, similar to last year. Uncertainty around the Labour Government’s first Budget created considerable activity immediately beforehand and he pointed to the enduring appeal of land and forestry-based investments.

He added: “We have definitely seen a mature market buying forest assets that is focused on growing timber, a global commodity in short supply, with taxation incentives being less of a driver.”

The full Forest Market Report can be found here: The UK Forest Market Report – Tilhill Forestry

*The period covered by the report is the 1st September 2023 to 31st August 2024. While this is the most comprehensive of UK forestry deals and listings, there are a number of off-market deals not captured in the analysis, meaning the total market is larger than the figures listed here.