Austrian Businessman Makes £3m Forestry Investment in Ireland
An Austrian investor has made a large investment in Irish forestry, The Irish Times reported on Wednesday (August 29). The unidentified businessman’s acquisition of 921 acres of forestry land was completed in a €3.85 million (£3 million) deal and included parcels in 20 locations in six Irish counties – Clare, Kerry, Leitrim, Laois, Roscommon and Mayo. The tracts had been assembled and planted by Irish Forestry Services Asset Managers (IFSAM) over a 30-year period.
According to Trevor McHugh, managing director of IFSAM, this latest forestry land sale is unusual for the fact of the foreign buyer, with most of the previous acquisitions having been made by Irish interests. Mr McHugh explained that while in the past this alternative asset class had generally been traded within the domestic forestry industry, the IFSAM board had decided that an offshore marketing campaign was appropriate on this occasion to secure the sale of the properties.
!m(/uploads/story/331/thumbs/pic1_inline.png)Fintan Tierney of Ireland’s largest property advisory firm DTZ Sherry FitzGerald, who handled the sale, marketed the portfolio primarily through a bespoke internet-based campaign as well as the DTZ international network. Mr Tierney said that this approach has generated a growing domestic and overseas interest in buying into Irish forestry, with more than 165 Irish and overseas investors being sent deal proposals for the land. Some of the enquiries were for parts of the portfolio and others for the entire forestry investment. According to Tierney, the campaign had resulted in the best deal being struck as regards value.
Conditions for timber investments in Ireland are generally viewed as advantageous by comparison with those prevailing in other countries. High rainfall, ideal soil conditions, a low incidence of environmental pollution and a mild climate all combine to give Ireland the highest forestry growth rates in Europe. Despite the excellent conditions, only 11 per cent of the Irish land mass is given over to afforestation, compared to an average of 38 per cent in the rest of Europe. Yet investors still have the opportunity to purchase both existing forestry plantations and lands suitable for afforestation. IFSAM sources both types for investors who can avail themselves of two main financial incentives — the afforestation grant scheme and the premium scheme. In addition, when making forestry investments in Ireland investors acquire ownership of both the land and the crop, with management provided by Irish Forestry Services.
As a strategically important national industry, Irish forestry also has a tax-free status, which makes it a tax efficient investment vehicle for investors. Hundreds of investors who put money into Forestry Services’ Third Forestry Investment Plan (a ten-year investment plan launched in 2001) received tax-free returns of 46.6 per cent with the sale of the portfolio. These figures add significantly to the Irish forestry investment’s appeal, explaining why during the last few years overseas investors have shown an increasing interest in the asset class.
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