#Vineyards — 23.12.2015

The Forestry and Timber Markets in France

Benoît Léchenault

Benoît Lechenault answers our questions about the major trends on the forestry and timber markets in France


Benoît, few people know that France is the country possessing the biggest area of hardwood forests in Europe.

That’s true, France is number one for hardwood forests, which cover 10.7 million hectares, and with its 16 million hectares of forest in all, France is the third European country for forested land after Sweden and Finland. Of these 16 million hectares, three-quarters are privately owned. The owners are mainly private individuals wishing to diversify and pass on their personal assets.

How has the forestry market changed in recent years?

First of all, I should point out that this is a niche market: the areas that changed hands in the 15,000 transactions in 2014 amount to only 113 100 hectares, the equivalent to 0.9% of the privately owned forests. What’s more, this market concerns areas of less than 10 hectares. Forests of over 100 hectares, accounting for around one-quarter of the total surface area sold, represent only 1% of these 15,000 transactions.

And what can you tell us about prices? Are there entry points like on the capital markets?

The average price is €4 000 for one hectare of forest land in France. This price is closely related to the volumes of standing wood and the type of species. The value of the different species depends on several factors: not only the outlets provided by each specie’s market (furniture, construction, etc.) but also very much on the location and the soil quality. The most beautiful forests are valued at prices of over €10 000 per hectare. These prices have been rising for 10 years now, by around 4% per year. The highest priced locations are in the northern half of France (for instance, Normandy, Jura, Vosges, Central and Burgundy). At the opposite end of the scale, the cheapest areas are in mountainous regions, particularly those in the South of France: the Pyrenees and Provence. Unlike the financial markets, it is difficult to establish entry points for the forestry market as its cycles are very long. We can nonetheless observe that prices have greatly increased over the last five years. This is particularly true for the best quality forests.

How is the timber market distinguished from the forestry market and what are its trends?

The timber market is effectively different from the forestry market. For many years now, timber prices have not been directly correlated with the price of forest land. Other factors come into play for pricing timber, particularly consumption momentum. The price of hardwoods is mainly influenced by the furniture, flooring and cooperage markets, whilst softwood prices are subject to industrial demand (building, construction, etc.). In 2014, we saw a general rise in prices, mainly due to a catching-up phenomenon: in previous years, professional buyers in the sector had preferred to use their inventories because of the economic slowdown. The latest sales confirm the upward trend observed over the last two years. The market remains strong with solid demand for practically every species.

To conclude, who are these markets for?

Timber is a commodity market product and this is a market for professionals. However, unlike other markets such as that of wine or agriculture, an individual who is interested in this segment can easily find a professional to exploit his timber production.

Forests, on the other hand, are a real estate market asset and so are a more accessible investment for individuals. An investor’s motive for acquiring forest land must be that of wealth diversification: a forest is a tangible asset whose value is often without any correlation whatsoever with that of the capital markets. In addition, private individuals who have a personal love of nature or hunting may also be interested in investing in a “passion” asset.