Latest information on the forest property market
Statistics from Suomen Sijoitusmetsät Oy and the National Land Survey of Finland reveal that the forest property market, which had accelerated in recent years, calmed down in 2022.
There were fewer forest property transactions in 2022 than in the previous year across the whole country, particularly in North Ostrobothnia, Kainuu, and Lapland. Measured in euros, however, the market grew everywhere except in Lapland. The average size of a forest property involved in a transaction was 35 hectares, with an average value of €158,000.
Changes were particularly evident in the volume of properties sold, which fell by nine per cent nationwide. The largest percentage decreases in transaction volumes occurred in North Ostrobothnia, Kainuu, and Lapland.
“General economic uncertainty and rising interest rates began to dampen the long-standing and very strong demand for forest properties. Fewer forest properties also came onto the market than in 2021,” says Eero Viitanen, Head of Forest Information at Suomen Sijoitusmetsät.
Prices rose, but more slowly than before
Although the number of transactions fell, the total value of properties sold grew by 18 per cent across the country. When examined by major regions, the market only contracted in Lapland. The market grew the most in Southern Finland, by 29 per cent.
“Properties sold in 2022 had an average of eight per cent more timber than those sold the previous year. This partly increased the euro amounts. The average volume of growing stock on the properties involved in transactions was 102 cubic metres per hectare,” Viitanen says.
The Suomen Sijoitusmetsät Market Price Index, which describes the change in the price level of forest properties, continued to rise in 2022, but more steadily than the previous year. In 2021, prices rose at a record pace, nearly 11 per cent.
“During 2022, the price level rose by 8.3 per cent across the whole country. In Central Finland, the rise continued at a rate of slightly under ten per cent. In Lapland, the increase was only 4.6 per cent.”
Professional investors account for half of forest property transactions in Central Finland
Viitanen estimates that market uncertainty particularly affected the activities of non-professional forest property buyers.
This estimate is supported by the fact that the role of professional forest investors in the market was clearly more prominent than before. Professional forest investors include forest funds, investment companies, and professionally managed and expanding jointly owned forests.
“The share of professional buyers in the number of forest property transactions grew during the year to 43 per cent nationwide, and when measured in euros, to as much as 56 per cent. The share was largest in Central Finland, accounting for about half of the number of transactions and a staggering 66 per cent of the value of transactions,” Viitanen says.
Viitanen says that stumpage prices, which have risen more than inflation in recent years, have supported the positive price development of forest properties. He believes that the stabilised price increase of properties brings stability to the market.
“Neither sellers nor buyers have cause for concern. The stabilisation of price increases is a good thing for all operators. For sellers, the good news is that prices are still high, but there is no longer a need to postpone a potential property sale in the hope of a sharp price rise.”
Changes in the forest property market by major region in 2022
Professional: E.g., forest funds, investment companies, and professionally managed and expanding jointly owned forests (excluding private individuals who buy forest professionally).
Southern Finland: The regions of Southwest Finland, Uusimaa, Kanta-Häme, Päijät-Häme, Kymenlaakso, South Karelia, and Satakunta in their entirety, as well as the southern parts of the Pirkanmaa and South Savo regions.
Central Finland: The regions of Ostrobothnia, South Ostrobothnia, Central Ostrobothnia, Central Finland, North Savo, and North Karelia in their entirety, as well as the northern parts of the Pirkanmaa and South Savo regions.
The table shows the percentage changes in the forest property market nationwide and by major region in 2022. Sources: Suomen Sijoitusmetsät Oy and NLS.
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