Myths about forest investments
Author: Kristi Nigul, Published: 02/03/2023 09:00:00
Forest investments can be compared with any other investments - all investments require attention, time, knowledges/skills and also some financial freedom.
Owning a forest property doesn’t mean, that the owner himself/herself can cover all the needed aspects in order to be successful. Many of the forest investments are not due to economic considerations, but decisions not to invest – are based on myths that forest investments are complicated and hard to handle. Every investment (when it’s done the first time) is complicated and new – but if you know, where to ask, it can be easier.
In the following papers HD Forest will highlight some of the myths we have heard during our management
- Forest investment is complicated
It depends on how to manage the property. Being a forest owner, who has a forest education or practical experience – everything seems simple. Being a forest owner who has become forest owner through inheritance and having no knowledge – it can be hard, and where to start? There are several options in order to become a successful forest owner. The first thing is to consider, what this property means to you: (a) is it an investment – for what period of time, what goals have to be achieved; (b) is it a property to be left for the next generation etc. If these considerations are clear, then the forest owner can ask for advice from forest management companies like HD Forest AS. They will advise how to achieve all the goals, that the forest owner has. Forest owner decides and HD Forest will do all the work, not only forestry work, but also the book-keeping. So, forest owner doesn’t have to worry about the laws, the machinery – basically everything is done for him.
- Forestry is only for hunting and recreation – not for financial return
The forest is not only a place where to hunt and pick berries, there are hidden values more than just hunting and leisure. In the Baltic States forest properties are priced according to their commercial potential to produce wood. The forest sector in the Baltic States is as commercial as any other business. More than 50 % of the land are covered with forest and this sector is giving jobs to thousands of people and contributes highly to the country’s economy. Land prices have increased year by year and they will continue. Timber prices are more volatile and depending on the market and the world situation: Prices may decrease or increase tremendously (like it happened in 2022). If we talk about the return of a forest property, then we can say that most of HD Forest’s clients have gained more than 10 % return on their forest ownership.
- Forest investment is not a liquid investment – getting out is hard
The Baltic States have a highly active market, where private forest owners and companies and timber industries are participating. Of course, if we talk about liquidity, then forest properties are not as liquid as shares what can be traded on a continuous basis. But selling your property in the Baltic States is not a problem due to active property market. In 2022, there were over 2,000 deals with forest properties and the average hectares of the deal were 10.
More to come with other articles, so keep an eye on HD Forest’s website:
https://www.hdforest.com/news/hd-forest-news and ask more by writing to us.
Contacts can found here: https://www.hdforest.com/contact