Farm Ireland
Independent.ie

Tuesday 26 September 2017

Irish chip in to keep forests in the family

Caitriona Murphy

Caitriona Murphy

Irish investors are following their European counterparts whose 'old money' wealth was generated by forestry assets in the family.

Interest in buying forestry plots as a long-term family asset is growing, according to Trevor McHugh of IFS Asset Managers, with forestry buyers keen to provide an income stream for both themselves and the next generation.

Around 5,000ac of forestry land is sold in Ireland annually, with prices ranging from €2,500/ac to more than €5,000/ac depending on the individual plot.

Buyers of forestry through IFS Asset Managers can be broadly broken into two types. The first cohort is buyers who want to buy mid- to late-rotation forests in order to cash in on the timber sales and who will either re-plant the land for themselves or for resale.

The second group of buyers are those who take a much longer-term view of the purchase, according to Mr McHugh.

"They want what we call multi-generational investments," he explained.

"They want the purchase to benefit themselves, maybe in the form of a pension pot at harvesting, but also to benefit the future generations of their family," he added.

"It's commonplace in Europe that a proportion of a family's wealth would be related to forestry. I spoke to one European customer whose family originally bought a forest in the 1800s and it was the only part of the family business that was still in place 200 years later," he said.

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Mr McHugh said Irish forestry buyers were beginning to copy the Europeans in their attitude to forestry as a long-term asset.

"But here in Ireland, the growth rate in forestry is so good that we can produce three rotations in the same time as it takes for one rotation in Europe, so each generation could retain some revenue from it," he added.

DEMAND

Mr McHugh said well-managed 25-year-old forestry plots are currently making €5,000-5,500/ac, while bare land in good locations with forestry permits in place could command €4,000/ac.

Roscommon-based auctioneer Paul Lafferty of ForestSales.ie said the strongest demand in his experience was for plantations of pure Sitka Spruce coming close to thinning or already thinned, as well as plots coming close to clearfell.

In general, pension funds are buying forestry plantations in excess of 30ac, while private individuals are buying 20-30ac plots. In some cases, smaller parcels of less than 20ac are being snapped up by urban dwellers who intend to use the thinnings as firewood and cash in on the clearfell harvest.

Irish Independent