Forestry investment events highlight growth in sector
The global forest products industry provider, RISI, has announced a major Forest Investment Conference, highlighting the skyrocketing interest in this sustainable, reliable asset class.
Forestry as an investment class has all the buzzwords you could expect from a sector that is currently seeing a boom in interest from buyers across the globe – sustainability, profitability and reliability. So just why is forestry enjoying such a boom at the moment? As well as incorporating all of the necessary buzzwords as mentioned above, forestry investment hits upon the magic combination of factors. It’s a major sector in which the product is guaranteed, yet unlike many others of this ilk, it has minimal media or analyst coverage and as a result is currently under-owned by major corporations. This leaves room for the investor, both in terms of actual forest investment and also in terms of related forest product investment such as timber construction, pulp and paper products.
Across the globe, there has been a steady uptick in forest product prices over the last five years, with the major demand coming from China, India and Japan, three of the biggest net forestry importers in the world. Due to bad practices in terms of wood management in Asia, its wood deficiency looks set to continue to grow while demand for wood and wood products continues to rise – good news for forestry and timber investors.
In terms of timber construction, the US housing market is continuing its slow recovery while new homes in Japan are starting to appear once again. It has also been said that the Japanese Government is once again considering timber construction after years of largely ignoring the material. Earthquake-prone zones are looking at wooden construction with new eyes, partly due to the cost effectiveness of the material and also due to the strength and flexibility it has shown following an earthquake, withstanding the disaster far better than buildings made from other materials. An uptick is also tipped for the housing market across the European Union – again, positive news for timber investors.
In terms of expected returns, forestry is certainly looking appealing. Over a 20-year period, returns of between five and eight per cent look likely. There is also no pressure in terms of a timeframe in which to sell, unlike that of many other asset classes. The investor can wait for the very best time, either in terms of personal gain or fluctuating market prices and remain safe in the knowledge that their asset will not fall out of favour or grow old like grains or livestock will do.
The RISI event proves just how far-reaching the forestry industry now is in terms of a global asset class. Headquartered in Boston, MA, RISI – which has a truly global presence with offices across North and South America, Europe and Asia – has announced that its two-day Forest Investment Conference will be held on 15-16 March 2016. Located at the Convene Conference Center in New York City, the event will bring together industry leaders and investors from across the globe.
Discussions will be held on timberland investments in Asia, Africa, Latin America, Europe, Oceania and North America. Programme topics will include the many environmental benefits of investing in forestry, with talks such as ‘The Paris Agreement: What Does it Mean for Forest Investment and Carbon Markets?’ and ‘Investing in the Forestry Sector in Southern Africa – The Africa Sustainable Forestry Fund and the MTO Group’s Approach to Acquiring, Building and Restructuring Assets.’
Other more commercial discussions will include ‘Institutional Investment in Central American Timberland’ and ‘The Attitude of European Institutional Investors to Timberlands Investment.’ Potential investors may be interested in the discussions about the future of the timber sector, with discussions including ‘Outlook for Timber Demand, Supply and Prices’ and ‘Some Key International Timber Markets for Global Forest Investors.’
James Barrett, GWD Forestry spokesman, agreed that forestry as an asset class is enjoying a real boom time, adding that it was easy to see why this investment form appealed. “With demand for wood and wood products likely to always remain high across the globe with growing construction requirements, forestry offers investors that magic combination: a solid, reliable asset class with a real feel-good factor,” Mr Barrett said.