Real estate and sustainable investment specialist, TIME Investments, announced on Tuesday that it had bought one of the largest privately-owned forest in the UK – Barracks Forest in Perthshire, Scotland.
The company said the Barracks Forest offers more than 11,000 acres of Sitka spruce and pine trees, which yield FSC-certified wood and timber for products including paper and cardboard. TIME investments says these products are becoming increasingly desirable as the transition from plastics to sustainable alternatives progresses.
The interest in this sector as a whole is also progressing rapidly, with demand for UK forestry more than doubling since 2011, and 14,400 hectares of commercial forestry sold in the UK in 2019. Further, with the value of these sales coming to £121 million, it is estimated that the average gross value of forestry increased by 17% in 2019 alone.
Forestry as an alternative investment opportunity to consider
For four reasons, TIME Investments think that forestry ought to be given more attention by investors.
- The company states that forestry tends to have little correlation with other mainstream asset classes. In fact, with both the rise of biodegradable and renewable packaging solutions, and online deliveries, the demand for timber-based products actually increased while orthodox assets depreciated during lockdown. In this sense, it makes for an ideal portfolio diversifier.
- Second, there is strong potential for passive, organic growth and capital appreciation. As crops grow, the volume of timber increases – larger trees can be processed into higher-value products. Also, naturally, underlying land value increases over time, both led by organic land prices and increases in the value of forestry investments.
- The uptake of biomass production and facility installations in the UK and overseas will further increase demand for timber production and see timber waste materials be given profit-making potential.
- The company boasts that its latest acquisition adds to the existing portfolio of its Inheritance Tax service, TIME:Advance. As the description might suggest, this service prioritises assets which are tax-efficient. And while ethical investors might be right to question whether they want to be involved in tax-efficient products, forestry as whole is a burgeoning asset class which in the UK offers two years’-worth of inheritance tax relief; zero income tax on timber revenue; and no capital gains on increases in value on timber. Though, underlying land value is subject to capital gains tax.
Barracks Forest as part of the TIME Investments sustainable investment plan
Having invested in forestry since 2005, TIME:Advance also invests in a biomass plant near the Barracks Forest site. This commitment to clean energy supports the company’s other investments in wind, solar and hydro, which it says enables three quarters of its portfolio to be invested in sustainable and impact investment projects.
Speaking on the company’s continued interest in forestry, the company’s Head of Investments, Stephen Daniels, commented:
“Forestry assets are becoming increasingly popular with investors because they provide access to a sustainable investment, but also one that we believe offers low volatility and stable returns. Our research shows that 58% of retail investors said they need to think more about the future of the planet for their children – forestry helps them tick this box.”