Watch your money as it grows on trees

A mature Co Wicklow forest is for sale for around £800,000 - offering any buyer the chance to literally watch their investment grow. With revenue from timber sales exempt from income tax, the forest, much of which could be harvested within the next three years, will start releasing "a stream of cash immediately", according to agent Country Woodlands.

The 63-hectare (156 acres) property at Lugnagroagh, Valleymount, was first planted in 1961 and consists mostly of Sitka spruce and Norway spruce, with some Noble fir and Douglas fir.

The property has a gentle slope to the east with a view over Poulaphouca reservoir. It has access from a public road and contains a derelict house and outbuildings. The sporting rights on the land, including deer stalking, are also included in the sale.

The private sale of such a mature forest is unusual, as most privately-owned forests in the State were only planted since the mid-1980s following improved government incentives. Softwoods take up to 40 years to mature, so most private forests, at up to 15-years-old, are still quite young.

"This is a very unusual sale," said Donal Whelan, a forestry consultant and co-director of Country Woodlands. "I don't know of any private woodlands since the mid-1980s of this maturity that have been put on the market. There's a lot of younger plantations on the market, planted with the aid of grants, but this is one where trees could be sold for commercial timber immediately."

Mr Whelan said the buyer of the property would have "an immediate income stream. The underlying land has been valued very conservatively in the asking price, with no cognisance taken of the potential development value of the land".

He said the property would be attractive to an investor because income from commercial woodlands is exempt from income tax for individuals and corporations, regardless of their domicile.

Dividends paid by corporations out of tax exempt woodland income are also exempt income to the recipients.

Mr Whelan said there are also considerable Capital Acquisition Tax breaks for forestry, particularly for individuals who want to make a gift or inheritance to their children. "It's an ideal vehicle to employ to reduce the amount of inheritance tax to be paid," he said.

About a quarter of the trees could be felled over the next three years, with the rest coming to maturity within eight years, Mr Whelan said. The forest also includes 12 acres of young plantation which will mature in about 30 years.

Once an area is felled, it must be replanted, although in some limited cases this obligation can be waived by the Minister for Marine and Natural Resources.

Mr Whelan said the forest's owner has put it on the market so close to felling time to release capital for another investment opportunity. A fully mature acre of timber will fetch between £6,000 and £7,000 at current rates, he said

While timber prices are stable in the long term, they can be volatile from one year to the next, according John Bruder, head of property at AIB Investment Managers.

Most forestry investment in the Republic is made by pension funds rather than private individuals, said Mr Bruder. "It's usually a long-term investment and it's therefore not usually suitable for someone who wants to buy today and cash-in three to four years. But if an investor is happy to take a 10, 20 or 30-year view, then it's a good investment."

The annual yield is about 5 per cent per year above inflation - "a very satisfactory investment for a pension fund and an individual". "Forestry would tend to be a stable investment through good times and bad. It won't produce spectacular investments of the stock market, but it won't fall out of bed either," he said.

Offers should be submitted to Country Woodlands by October 28th.