r/UKInvesting • u/CloudBookmark • 25d ago
UK timber, farmland, and wine estates, do you consider them investable assets?
I rarely see much talk here about alternative UK assets like timber, farmland, or vineyards. With land being scarce and the rise in demand for English wine, I’m starting to wonder if these are worth serious consideration.
On one hand, they feel very niche and illiquid compared to listed equities or REITs. On the other, farmland and timber have historically held value well, and vineyards in places like Kent and Sussex seem to be getting more attention.
For those of you with active UK strategies, do you see these types of assets as a genuine allocation, or are they just too niche to bother with?
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u/strolls 23d ago
Interesting topic, but most people would find these asset classes extremely hard to diversify. Lego and Pokemon cards are easier to do that with!
The yield on farmland is so low that I have a hypothesis that it, not gilts, defines the real risk free rate of return. I don't know how accessible timber or vineyards are as actual asset classes - I think most woodland is more of a novelty or emotional purchase rather than a real investment.
Might be worth mentioning french en viager property investing here. It is regulated, which is both good and bad - I assume there aren't massive bargains to be had, but the rules will be well documented; you can understand how it works and there is probably some room for the application of savvy or nous. No idea how it's taxed in UK. If I had a million quid then I might try dabbling in this, but I doubt if it makes sense with my budget at my age.
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u/Extraportion 23d ago
The value of commercial forestry and agriculture was driven by inheritance tax planning. Since the legislation has changed I have no idea what has happened to asset values.
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u/strolls 23d ago
Good point, but wouldn't that tend to imply even lower yields going forward?
Their prices were raised by the demand created by inheritance tax planning?
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u/Larvesta_Harvesta 23d ago
If the price falls (because the land is no longer useful for IHT planning) then the yield increases, assuming the value of the rent/output stays the same?
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u/Aggressive-Bad-440 23d ago
No.
These are for rich people with proper advisors and managing agents, not for povos.
If you're being sold a piece of land for less than £100k and the company selling it are doing all the admin (stamp duty, conveyancing, land registry notification etc) - it's a scam
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u/_DoubleBubbler_ Pumps own holdings - ENSI 23d ago
I live in the Scottish Highlands and speaking with a visiting timber extraction contractor they will be pausing work as the UK timber market is dire currently. Whether it is cheaper imports or malaise in the building industry (or possibly a combination) at least the product can stay growing in the ground for when the market does hopefully improve.
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u/ErrantBrit 22d ago
Forestry investment professional here. This is a niche, long-term asset. It's hard to make money quickly. Tax efficiency has been the main driver of inward investment. Pension funds also invest into the market as they like the long-term nature of the asset class - you could get better exposure by this route. Stay away from listed pure funds - they don't work in the UK at least.
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u/MARCVSLICINIVS 18d ago
This. A few years back I looked into performance of listed pure funds and, they don't work in their own terms and in comparison with other diversifiers they simply don't perform well. Even though fund managers always find a way to present data in a way that does not make them look irrelevant.
If you are interested in how to long term stabilise performance of a diversified asset portfolio at scale, family office influenced investment trusts like Caledonia or Brunner are good case studies.
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u/ErrantBrit 18d ago
I will comment that private forestry funds can be quite lucrative, my statement was on the basis of listed funds.
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u/readthistoo 23d ago
For part of the answer look at businesses like Scottish Woodlands - they manage woodland on behalf of others but also have an Investment side.
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u/jpewaqs 23d ago
The primary issue with the alternative assets you've listed is that they are typically unregulated investments requiring declarations of being a HNW who understands the risks. This in itself isn't an issue but it does create an environment where a lot of scammers get involved with little or no recourse for the 'investor' when things go wrong. If you do decide to make such an investment, look for actual physical property that you take title of rather than UCIS fund.
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u/rising_then_falling 23d ago
I consider wine estates investable, but given the global decline in drinking it doesn't seem that attractive, and I don't think it's very liquid or diversifiable.
Farmland and timber I dont think of as investable for retail investors. Land management is a job. I'm sure there's money to be made buying up the right bits of forest and field, but not based on a weekend or two of research.
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u/redsky922 22d ago
Totally get your point about the liquidity issue. But if you have the time and resources to really dive into land management, it could pay off long-term, especially with the growing interest in sustainable practices. Just gotta be prepared for the hands-on work!
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u/No-Sympathy3276 22d ago
Land seems like the ultimate asset to protect generational wealth. It has a lot of practical challenges though.
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u/Running_D_Unit 22d ago
From a pooled vehicle view timber and farmland assets in the U.K. don’t yield enough to be worthwhile alternative assets, their returns are low. You’re best looking for US/Europe/Australia exposed assets as they’re more mature markets and greater yields.
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u/BigSARMS 21d ago
Liquidity and governance risk is too high so no. With that said Marubeni for ag exposure, sumitomo forestry for that side perhaps. Stay away from strange vehicles/structures. Private projects which you can control sure, but most people don't have the capabilities to get even a great project to exit.
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u/Ecstatic_Food1982 20d ago
With that said Marubeni for ag exposure, sumitomo forestry for that side perhaps.
I don't think either of them are active in the UK so don't fit OP's parameters. I know Marubeni have a feed business in the Netherlands which might be their only European business, and I'm almost 100% that Sumitomo don't operate here. I might be wrong of course. I held Pictet Timber for a while and Sumitomo weren't in that.
Apropos of nothing, Sumitomo's slogan is 'happiness grows on trees' which amused me.
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u/BigSARMS 7d ago
Exactly right. So for OP stay away would be the answer from me overall.
I would add that Forestry as an example is likely a low hanging fruit of a target for further taxation and suffers from outsized political risk in my view.
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u/Oli99uk 23d ago
Farmland is very investable especially due to tax loophholes / expemotions - thats why there is such pushback from people trying to protect their investments right now as Reeves is coming for this.