Our Forestry Investments
Land Ownership
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Forest Enterprises firmly believes that land ownership is an important and profitable part of the total forestry investment package.
Therefore our investments include ownership of the trees as well as the freehold of the land on which the trees are growing.
Historically, ownership of the land has proved to be very profitable. Land for which we paid $25 a hectare in 1972 has a value today in excess of $1,500 a hectare!
If the land is not owned by the investors, the landowner must be paid for its use. This can be by annual rental or by sharing the proceeds of the harvest. In other words, the initial capital investment is replaced by either an annual expense or a reduction in future return.
Not owning the land means more risk; you don't have absolute control over one very important input into the investment, rental may become excessive, or the profit share may become disproportional.
At current land prices, the land cost represents approximately 11% of the total sum invested. The financial impact of paying for the land at the outset is alleviated by the prudent use of a short-term mortgage.
