The Investment Property Databank (IPD) Forestry Index for 2005 posted a total return of 14.4%, a 5.1% increase on last year’s result and the highest return since the index began in 1992. Forestry comfortably outperformed UK bonds and improved upon last year’s move into positive figures for annualised average returns over both three and five years.

Placed in a longer-term context, forestry returns have out-performed UK Bonds over three years and UK Equities over a five year period.

“The forestry market has been particularly buoyant over the last two years, with many investors appreciating that forestry returns are tax free and that the asset sits outside the UK Inheritance Tax net. Steady timber market increases, new UK markets and worldwide commodity shortages should continue this trend”, said Alastair Sandels, managing director of the Fountains Forestry Division.