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Valuation

Is Timber an Overhyped Investment?

U.S. TIMBERLAND MAY BE ONE OF THE WORLD'S most overvalued asset classes.

Timberland transactions in the US 2009

Major timberland transactions have slowed considerably but some continue to close. I wrote an article for Forest Landowners Magazine (THE TREND IN TIMBERLAND PRICES) that was supposed to be published in October but the publishing date was postponed until late November so I thought I would do a little update on transactions to date for this year. From the list below, you can see that there are quite a few transactions but relatively few large ones.

Forestry returns outperform the rest over three years

London, 24th June 2009: Investment in forestry outperformed domestic commercial property and equities last year, producing a positive annual total return of 7.0%, eclipsed only by bonds, according to the IPD UK Forestry Index.By comparison, UK commercial property delivered -22.1¹%; UK equities returned -29.9²%, while listed property companies and trusts were the most vulnerable to the global market downturn, returning -46.6³% over 2008. Bonds, however, gained 15⁴%.

Timberland Valuation and the global economic crises

The issue in today’s post concerns why the transaction price of timberland has shown little or no decline in value but the stock price of the publicly traded companies that own timberland has declined dramatically. I will also look at what I think is happening in the timberland market today and how I see the market for timberland investment. But first, let’s set the stage.

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