13 minute read
New Factors Driving Commercial Forestry Value
According to the UK Forest Market Report 2021, the forestry market saw a recordbreaking year, with average values more than double what they were three years ago and the total value of the forestry investment market reaching a new high.
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he annual report, produced by John Clegg & Co and Tilhill, is now in its 23rd year and is regarded as the most comprehensive publicly available record of forestry transactions in the UK. This year it highlighted that the sector is attracting unprecedented levels of interest from commercial forestry buyers and financial institutions. Some are experienced forestry investors, but others are new market entrants with multiple objectives – part financial and part related to environmental, social and governance (ESG) considerations or natural capital outcomes.
The report shows that in 2021 a total of £200.4 million of forestry properties were traded, making it another record year for the sector. This year it includes a new section on the market for planting land, which shows an additional £53 million worth of land suitable for afforestation transacted, plus £26 million worth of natural capital land.
Peter Chappell, head of forestry investment, Tilhill said: “It is an exciting time to be in the forestry sector. The positive long-term outlook for timber values has buoyed confidence in how commercial forests can perform as an investment and the wider benefits of trees and woodland to society and the environment are being increasingly recognised. The growth in the value of an average stocked hectare has continued unabated, rising 21% this year. This means over the past three years, values have risen from £9,300 in 2018 to £19,300 in 2021.
“The report also highlights how the trend of younger forests achieving the highest unit values has continued into 2021. This shows investor confidence in timber values, and the fact that younger, secondrotation forests tend to be characterised by high yielding, improved
Key findings
• 21% increase in forestry values from just under £16,000 per stocked hectare in 2020 to £19,300 per stocked hectare in 2021. However, the spread in prices paid is wide, with significant geographic and quality variations • The total value of the forestry market was £200.4 million in 2021 (just over the £200.18 million in 2020), with 70 planting land deals also struck worth £53 million. • 10,400ha (gross) of forestry traded in 2021 (67 forests), compared with 12,500ha in 2020. • Decrease in average size of a property sold from 206ha in 2020 to 155ha this year. • Scotland provided largest share of commercial forest market at 76% by value.
Covers Timber Invest in Salvador Crosscut Technology from Daltons Wadkin
Salvador SuperPush 250 automatic crosscut saw
The installation of a Salvador SuperPush 250 chain fed automatic crosscut saw has allowed Covers Timber and Building Merchants to keep pace with increasing production demands and provide flexibility in staffing within their feeder mills.
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aving supplied timber and building materials across the South East for over 175 years, Covers now boast some fifteen branches with an extensive range of over 25,000 product lines. Wanting to satisfy growing customer demand Product Manager, Peter Openshaw, saw an opportunity to help push themselves ahead of the competition.
“We are fortunate that we have highly-skilled sales people, excellent production cability and a very positive attitude being open to new opportunities”, comments Peter. “Our ability to source most things and improvise and adapt ourselves to reflect our changing market helps us achieve strong performance results. Our competitors are very good indeed so this pushes us to try even harder.”
Following a thorough investigation of available crosscut saws on the market, Peter contacted Daltons Wadkin, sole distributors for Salvador in the UK and Ireland. “Peters requirements were very familiar – we have helped dozens of timber merchants with similar projects and I knew immediately we had the right solution”, enthuses Daltons Wadkin Sales Director, Andy Walsh. “For high production crosscutting the Salvador SuperPush range is ideal; automatic push infeed, cutting list optimisation, heavy duty construction; easy to use”.
The Salvador SuperPush 250 is a programmable crosscut saw capable of processing up to 130 cubic metres of timber per shift. Up to 7 infeed loading chains ensure the machine is continually fed with individual or stacked work pieces while the outfeed collection area is automatically cleared for uninterrupted production. Covers investment in a Salvador has given them flexibility in staffing which in turn has positively affected growth. Peter is keen to point out the benefits from a production point of view, “Automatic machinery cuts down on the labour required to carry out particular jobs. We have found it difficult to recruit recently and anything that reduces the need for labour helps with this problem”.
Turnkey delivery and commissioning was provided for Covers, expertly managed by the Daltons Wadkin project installation team. “We have a dedicated group of engineers within our service department whose sole focus is on delivering a frictionless installation and dedicated ongoing support when required”, comments Andy. “We go to extreme lengths to ensure all our customers receive the best possible service for the life of the machine.”
For more information on the Salvador range of crosscut saws, contact Daltons Wadkin on 0115 986 5201, email info@daltonswadkin.com or visit www.daltonswadkin.com
varieties of Sitka spruce, with proven timber extraction and a developed infrastructure. There is also some evidence that larger forests over 100ha are now attracting the highest per hectare values as an increasingly competitive market develops for high value deals.”
Edward Daniels, head of forestry at John Clegg & Co, adds: “2020 was an extraordinary 12 months in the forestry sector, but 2021 has more than matched it. Timber prices have remained high, plantation values are breaking new records and large institutional investors such as pension funds and other new entrants are allocating more capital to sustainable investments than ever before.
“Forests are seen as critical to growing the UK’s low carbon economy, which is why, alongside ESG and natural capital factors, companies and funds are so keen to invest. While there are those who would argue that rising values are a result of short-term supply and demand dynamics, it is our belief that the underlying worth of commercial forests is increasing because of the positive long-term outlook for timber prices, carbon income and other ecosystem services payments. The signs are extremely positive for the woodland and forestry sector with further growth in forestry values a real possibility.”
Planting land
It is the first year that the report examines the dynamics of the market for planting land, although interpreting trends is not without its challenges. Although land can be tracked that is thought, overall, suitable for afforestation, it is not always known if woodland creation will be the final land use. However, it is estimated that the total area of planting land purchased has risen from 4,460ha in 2020 to 6,480ha in 2021. By tracking 70 planting land deals across Scotland, England and Wales in 2021, compared with 33 in 2020, the average price per gross hectare was £8,500, up from £6,200/ ha in 2020. This equates to a figure of £11,000 per plantable hectare in 2021.
Mixed woodlands
The UK Forest Market Report also tracks transactions for mixed woodland sales over 10 hectares in size. Broadleaved woodlands can vary greatly in value with location, look and feel being significant factors, making it a far more subjective market than commercial forestry.
Values have continued to rise in 2021, with demand outstripping supply in what is a small, but strong, market. England dominates the mixed woodland market accounting for £7 million of the 2021 UK sale total of £10.7 million. The average price in England in 2021 was £6,170 per acre, up from £5,330 in 2020. However, average values do mask a huge variation in values – the range in prices being paid in England during 2021 was £2,000 to £11,400 per acre. Mixed woodlands of less than 10 hectares are not covered by the report so the figures are not overly skewed by the sale of very small blocks of woodland, which in the right locations command a significant price premium.
This year’s report also includes an article exploring the factors influencing prices for woodland carbon, now and into the future. The report carries a guest contribution from Stuart Dobrijevic, asset manager for Abrdn, who writes about how the business is committing capital to ‘nature-based solutions’ which will help to tackle climate change. An Abrdn-managed fund has already bought an area of about 1,400 hectares in the Cairngorms National Park where largescale native woodland creation and peatland restoration will take place.
The UK Forest Market Report has been produced since 1988 and the data series now covers 23 years, incorporating 1,909 transactions which total some £1.6 billion and 299,000 stocked hectares.
More at www.johnclegg.co.uk www.tilhill.com
Positive Year Ahead Expected
The recent statement from the Construction Leadership Council’s Product Availability Working Group, painted a positive picture for the supply of building materials including timber at the start of 2022.
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he regular update that is jointly prepared by John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, that co-chair the Product Availability working group sees: “An improvement in the supply situation across all regions in the UK, which has taken some pressure off prices. However, this is largely due to a seasonal decline in activity. While much has been done to ameliorate the issues seen earlier in the year, there remain challenges in relation to UK production capacity for some products, and in relation to the operation of the logistics and shipping sectors.
“We anticipate the return of pressure on supply chains to deliver products as construction activity remains strong next year, with longer lead times and further price increases anticipated. Furthermore, despite precautions being taken at merchants and manufacturers, the rapid increase in cases of Omicron is likely to impact production and operations into the New Year.
“The uncertainty around delivery and price has a disproportionate impact on SME builders working mainly on domestic repair, maintenance and improvement projects, where clients want price certainty before the project begins. It is, therefore, essential to maintain open lines of communication throughout the supply chain. We encourage all sectors to continue to work closely and collaboratively to manage challenges and plan future work.
Current and future challenges include supplies of many timber products have returning to more normal levels and prices have fallen from highs, particularly for structural timber, however tongue & groove remains in short supply. Continuing congestion both here and at Scandinavian ports may lead to reduced supplies and higher prices in Q1 2022.
Pressures on global shipping, including delays and volatile prices, look set to continue well into 2022. In addition to ongoing disruption stemming from China’s sustained ‘zero’ policy regarding Covid-19 outbreaks, performance issues at Felixstowe have led some major shipping lines to divert vessels headed there from Asia to other, smaller ports in the UK.
The logistics sector reports recent progress with government providing additional training opportunities and grants to get more HGV drivers on the roads. With driver wage increases and flexibility in working making the industry more attractive, we are hopeful that driver shortages will have less impact on our sector in 2022.
More at www.constructionleadershipcouncil.co.uk
Pricing Timber – a Supplier’s view
Nuneaton Roof Truss sales director, Josh McEwan has many reasons to be cheerful about the way the timber sector is heading in 2022.
With global production and stock levels at an all-time low, supply chains bottlenecks, plus labour, resources and skills shortages mounting, combined with the challenges of Brexit and the globally increased demand for materials there are seemly dark days ahead with endless rises on the horizon.
Here at Nuneaton Roof Truss, we have been trading for over 20 years and in that time, we have seen the market change exponentially with the price of raw materials rising year on year, increased inflation and wider market costs making trading challenging. However, for all the predicted doom and gloom we believe that simply is not the case. Yes, prices are higher than they were 2 years ago and there are many factors as to why however, innovation, smarter working practices, new technologies and processes enable us to counterbalance cost by driving greater efficiencies and speed.
As the market and Covid-19 pressures ease, analysts predict production levels across Europe, the US and Canada will begin to normalise as will global supply chains into 2022. The market sees timber stocks returning to usual standards within the first quarter with pricing beginning to reduce through Q1 and then into Q2 Q3, which is great news for the industry and the timber, housebuilding, and construction firms.
With construction project margins further squeezed we are committed to supporting our partners in challenging times and can ensure we are doing everything we can do to secure the best possible price driven by innovation and industry know-how. Our team is committed to supporting our customers to come out of this stronger than ever before and we look forward to what the future holds together.
More at www.nuneatonrooftruss.co.uk
External Timber Cladding: size does matter
The Timber Decking & Cladding Association (TDCA) focus this year is around highlighting the key information that those buying, selling and using external timber cladding should be aware of.
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specific subject is the size of cladding profiles, specifically tongue and groove (T&G) which is an interlocking system where size matters most. According to BS8605 – External Timber Cladding Part 1: Method of Specifying, for medium movement timbers such as Siberian larch, the profile width for a T&G board is restricted to a maximum of 125mm.
Further guidance on tongue dimensions and movement gaps is provided with bigger gaps and tongues being required for wider boards; at 125mm wide board the standard states a minimum movement gap (mg) of 4mm, tongue width (tw) at least 15mm and thickness (tt) at least 7.5mm. General width to thickness ratio for all profiles is between 4:1 and 6:1.
By allowing for the natural movement of the timber mitigates problems arising, tongues don’t become disengaged or crushed and the cladding stays secured to the wall – so long as the correct fasteners are used, but that is a topic for another day!
Every cladding company should have an up-to-date copy of BS8605 (it may be updated in a year or so but remains a relevant document)
which contains guidance on other profile styles including rectangular, shiplap, parallelogram and THE TIMBER CLADDING HANDBOOK for specifiers, buyers and installers featheredge. The TDCA website is a useful resource for all things timber cladding related. You can also download our External Timber Cladding Handbook – produced in partnership with the Timber Trade Federation and peer reviewed by Dr Ivor Davies (author of BS8605 and the forthcoming new version of the TRADA External Timber Cladding Manual). The 48-page publication provides clear, summarised and illustrated guidance. For those looking for added assurances of quality, the TDCA operates the CladMark quality accreditation schemes which cover products, suppliers and installers. They provide audited verification of compliance with good manufacturing practices and sound installation techniques trusted by the TDCA and the wider industry. The Timber Cladding Handbook is available as a free pdf download with a printed version available for £12 (inc p&p). More at www.tdca.org.uk/publications
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