StellFoxworth189
Investing is forestry has been utilized as a portfolio diversification and optimisation tool by wealthy investors for many years, and now many smaller investors are seeking alternative assets capable which generate returns that do not depend on the performance of volatile markets. Actually many large institutional investors for example pension funds, university endowments and specialist hedge funds are acquiring productive natural resource real estate for example farms and timber plantations in order to reduce volatility and align portfolio growth with increasing trends in demand for commodities from an ever-increasing global population. Social and economic development in China alone will probably see demand for recycleables for example food, timber and increase exponentially as huge numbers of people change from rural areas into urbanised cities and require greater inputs of food, energy and raw materials for infrastructure.
Let's consider some of the key reasons that an investor might consider forestry as part of a diversified portfolio of investments.
Direct forestry investments involve the acquisition of land assets, through either freehold or leasehold title. This land may be a current forest stocked with trees of various species suitable for harvesting in order to sell as constructions timber, pulp of paper and other associated wood products, or it may be vacant land with suitable topography, infrastructure, local climate and soil quality well suited for the establishment of a new forest.
Trees are managed by a skilled forest manager who will arrange the management, harvesting and replanting of trees at the relevant reason for the forest life-cycle, along with the processing of raw timber into more valuable downstream products for example sawn lumber which commands a higher price in the open market. The commercial interests are looked after by an experienced timber business professional using the right local contacts required in order to sell the harvested timber. Who owns the home benefits from the revenue created from the sale from the timber.
This asset class is considered a non-correlated investment because returns are not derived from financial markets; this means investors can help to eliminate their exposure to volatile equities and lower the likelihood of sever financial losses should the markets fall suddenly as witnessed within the newest financial crisis.
In fact the financial return to an investment in productive timber properties comes mostly from the biological development of the tree into valuable timber. Each year trees continue to grow in dimensions and for that reason command a higher price within the timber markets regardless of whether financial markets or even the global economy is booming or falling. In addition, the price per unit of timber also increases as interest in sustainably sourced timber from the growing global population also increases, developing a two-pronged capital growth strategy, and should timber prices fall (which they do if demand is low), investor may simply leave their trees to develop for an additional year, letting the biological growth offset any price depreciation.
In conclusion, it is right to explain there are of course risks to forestry investment, but these risks are very different to the potential risks associated with traditional financial assets. Timber properties are physical tangible land assets which will never depreciate to nothing, and continue to grow in size and value whatever the economic weather, so might make to have an interesting tool for investors concerned about the condition of the global economic recovery and seeking an alternative investment that offers a high amount of capital security and superior roi.
Prospective Investors are encouraged to ask for the counsel of the experienced professional real estate investment consultant with a history of sourcing and delivering successful investment projects in the forestry sector to be able to properly comprehend the risks and opportunities associated with this niche asset class.
