Trends in the forestry transaction market
With 17.5 million hectares, French forests cover 32% of the metropolitan territory and represent the fourth largest forest area in Europe. They are owned 75% by 3.5 million private owners. Julien Terrier, Operations Director of Forêt Patrimoine, an agency specialized in forest land transactions, analyzes the trends of this market in which, each year, 1% of the forest area changes hands.
Interview conducted by Matthieu Gombault, Head of Wine & Forest Expertise at Société Générale Private Banking.
How is the forest land transaction market performing today?
In terms of area, the market is structurally stable from one year to the next. In 2024, it represented more than 140,000 hectares with a value of 2 billion euros. However, the value of forests has significantly increased in recent years, driven by a stable supply, sustained demand, and the continuous rise in wood prices (which are now stabilizing). One hectare sells on average for €14,000, but this figure hides a disparity between large areas that resell at a higher average price and small plots, which represent the vast majority of transactions.
In France, the market is indeed very fragmented: out of 22,000 transactions in 2024, more than 19,500 involved private sales of less than 10 hectares. As for the market that forms the core of our business – forests larger than one hundred hectares in major forest production basins (from the Massif Central to Île-de-France and Burgundy) – there are nearly 150 transactions per year, covering an area of 35,000 hectares with an average value closer to €15,000 per hectare.
What are the types of buyers for these large production forests?
Institutional investors are very interested in this market, which has led to the creation of numerous forest investment groups (GFI). These particular civil companies work to raise funds, purchase managed forest estates, maintained and exploited by professionals, and distribute the income generated by this activity to investors.
Individual investors also seek to invest in forests to diversify their assets, and sellers are often pleased to be able, beyond a simple transaction, to pass on "their family story" to other individuals. Today, individual buyers still represent more than half of these transactions.
What are the drivers of the forest economy?
The main driver of the forestry economy is the sale of wood, which depends heavily on the construction sector. In a sluggish context, the wood market is characterized by volatility and diversity according to wood species. Oak, for example, has appreciated significantly, but the price increase has caused a shift towards ash or chestnut. Softwoods are also holding up well, with a 25% increase in Douglas fir prices between 2023 and 2024.
Generally, prices remain favorable for foresters who now sell wood both for export and to local sawmills and operators. The disruption of supply chains during the Covid pandemic and the upheaval of trade flows due to the conflict in Ukraine have also contributed to the overall resilience of the market. Additionally, there is a growing share of demand for wood in the construction sector, as a substitute for more carbon-intensive materials.
How does carbon capture fit into the forest economy? Is this issue also a driver of investment?
In recent years, there has been growing awareness and the implementation of initiatives to value forests' capacity to store carbon sustainably. This is the case with the Low Carbon Label created by the State in 2018 to finance projects that have a positive impact on the climate. Most of the labeled projects in the forestry sector involve afforestation of former agricultural lands, reforestation of degraded forests following fires or dieback, and focus on diversifying the species planted.
However, in an economically fragile context, private actors—companies and landowners—remain cautious, and the carbon credit system1 on which the Low Carbon Label2 relies is not yet a sufficient lever to transform the forest economy market.
Are climate issues still a real challenge for the sector?
Yes, it is a challenge that the industry must face because climate change increases phytosanitary risks (multiplication of pests and harmful insects) as well as risks related to drought and fires.
In the French territory, there is a divide between forests that are deteriorating and those equipped to resist. Dieback particularly threatens certain areas where soils are shallower, such as in the Burgundy–Lorraine axis. Forests that benefit from favorable soil and weather conditions, as well as a good match between the species present and the local environment, are the most sought after and appreciated, such as in Normandy or in the West.
Does political instability also influence the forest transaction market?
So far, the forestry sector has not experienced upheavals in terms of legislation and taxation. It is a market that demonstrates its balance, stability, and robustness year after year. The key challenge for owners wishing to sell is to surround themselves with the right advisors to ensure the proper enhancement of their forest.
Julien Terrier
Julien Terrier, an agricultural engineer, is the Operations Director at Forêt Patrimoine, an agency specializing in forest transactions. Since its establishment in 2005, Forêt Patrimoine has facilitated over 320 transactions involving forests ranging from 30 to more than 4,000 hectares across the entire territory. Its teams, composed of managers, experts, and forestry technicians, support a wide range of clients including individuals, families, and joint ownership groups, as well as investment funds, family offices, and institutional investors in all their projects: selling a forest estate, purchasing forest assets, and managing a Forest Grouping for the short or long term.
Sources
1.Carbon offsetting is the process aimed at counterbalancing carbon dioxide (CO2) emissions resulting from human activities (industry, transportation, food production, etc.) by investing in projects designed to generate equivalent reductions of CO2 in the atmosphere. These projects, when meeting specific criteria, lead to carbon credits that their holders can trade. A carbon credit represents a unit equivalent to one ton of CO2 avoided or sequestered.
2. Created by the Ministry of Ecological Transition, the Bas Carbone label aims to contribute to France’s climate commitments by facilitating the financing of projects that reduce and sequester greenhouse gas emissions. It applies only to well-defined projects whose emission reduction and sequestration objectives clearly fall within the scope of an approved methodology.
DISCLAIMER :
This document has no contractual value. It is not intended to provide an investment service such as investment advice, a related investment service, arbitration advice or legal, accounting or tax advice from Société Générale Private Banking France (‘SGPB France’), which cannot therefore be held liable for any decision taken by an investor solely on the basis of its content. SGPB France undertakes neither to update nor to modify it.
Before making any investment decision, please review the details of the documentation for the service or product being considered, including any associated risks, and consult your legal and tax advice. If the document is consulted by a French tax non-resident, he or she will have to ensure with his or her legal and tax advisors that he or she complies with the legal and regulatory provisions of the jurisdiction concerned. It is not intended for distribution in the United States, or to a U.S. tax resident, or to any person or jurisdiction for which such distribution would be restricted or unlawful.
The past performance information that may be reproduced is not intended to guarantee future performance. These future performances are therefore indicative. The return to investors will vary depending on market performance and the shelf life of the investment. Future performance may be subject to tax, which depends on your present and future personal situation.
Societe Generale has put in place a policy to manage conflicts of interest. SGPB France has put in place (i) a policy to handle complaints made by its customers, available on request from your private banker or on its website and (ii) a policy to protect personal data (https://www.privatebanking.societegenerale.com/fr/protection-donnees-personnelles/). At any time and without charge, you have the right to access, rectify, limit processing, erase your data and the right to object to their use for the purposes of commercial prospecting by contacting our Data Protection Officer by email (protectiondesdonnees@societegenerale.fr). In the event of a dispute, you can lodge a complaint with the Commission Nationale de l’Informatique et des Libertés (CNIL), the supervisory authority responsible for compliance with personal data obligations.
This document is issued by Societe Generale, a French bank authorized and supervised by the Prudential Control and Resolution Authority, located at 4 Place de Budapest, 75436 Paris Cedex 09, under the prudential supervision of the European Central Bank (‘ECB’) and registered with ORIAS as an insurance intermediary under number 07 022 493, orias.fr. Societe Generale is a French public limited company with a capital of EUR 1 003 724 927.50 on 17 November 2023, whose registered office is located at 29 boulevard Haussmann, 75009 Paris, and whose unique identification number is 552 120 222 R.C.S. Paris (ADEME FR231725_01YSGB). More details are available on request or at www.privatebanking.societegenerale.com/. This document may not be communicated or reproduced in whole or in part, without the prior written consent of SGPB France.
Regular wealth assessments are essential to adapt your financial strategy to life changes, seize new opportunities, and...