Forest investment
I- A safe and profitable investment
- Investing in a forest is, first and foremost, about acquiring property. It is of real value in the same way as bricks and mortar; it represents a stable investment in the long run, without the ups and downs of financial markets.It is also a source of regular income from timber production. This is a sustainable raw material with a growth rate of 3% per year.
The majority of banks, insurance companies and pension funds invest in forestry through their branches and increase the security of their assets.
- An attractive tax system particular to forestry enables you to benefit from tax free incomes. A reduction of Wealth Tax liability by 75% is possible under certain conditions (commitment to durable management with the State), a total avoidance of Wealth Tax is possible under certain conditions.
- Limited risk taking
Capital loss risks in connection with the purchase price of the forest are vey low. Value per hectare should increase in the coming decades, considering the present circumstances.
If the price of timber decreases, the forester can wait for the price to rise again in order to sell his wood preforming only improvement cuts. The forest has time to waiit, it just increases in volume.
The other risks are basically natural and climatic:
- storms (the whole of the country), this risk is insured.
If the price of timber decreases, the forester can wait for the price to rise again in order to sell his wood preforming only improvement cuts. The forest has time to waiit, it just increases in volume.
The other risks are basically natural and climatic:
- storms (the whole of the country), this risk is insured.
- forest fires ( limited to Mediterranean coast and the Landes), this risk is insured.
- pathological and parasitical attacks (species ill-adapted to the location), this risk is also highly reduced thanks to the selection of the best adapted planting to the station.
II- A favourable context
In the economical and environmental context (Rio Conference, Kyoto Protocole, Helsinki Process…) the European, American, Canadian and more particularly the French State (Grenelle Conference about the Environment) have a policy much in favour of forest development and improvement.More and more states are today turning towards renewable and environment friendly energies.
All the key economic players agree that the demand for timber will be stronger in the coming decades, specially in wood energy, papers, cardboard and timber.
Today, in terms of forestry, France is the third largest forest area in Europe after Sweden and Finland. It is the first European country concerning standing tree stock and the biggest European producer of undressed leafy trees and sawn timber.
The timber industry employs 425 000 people; this is 1.7% of the national workforce (in comparison the car industry represents 285 000 people).
However, France remains a timber importing country and shows a deficit of 6 bn euros in this field. Although the forest covers more than a quarter of the national territory (27%), the resources of the country are insufficiently exploited for lack of private forest management and because the small plots are in a state of neglect. Three quarters of forests belong to private owners.
Forestry and the timber market is therefore very real.
III- A price within reach
In France, the average value per hectare is 5380 €, for underdeveloped forests. This value hides important differences between forests. The price per hectare can vary from 740 € up to 8800 €. (source: terres d’Europe-Scafr according to Safer, 2008 study)The value of a forest takes the following parameters into account:
- the presence in the region
- the base value
- the quality of the station
- type of trees
- volume
- the health of planting and its suitability to the location
- the quality of access tracks, skidding areas, depot spaces - - cynegetic value
- the existence of sawmills nearby
- the immediate environment
- and many more factors peculiar to each forest
- the economic situation and the strength of the market
The presence of buildings ( houses, castles, oubuildings) have a considerable influence on the value of a forest.
