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Going Green With Ethical Investments
May 7, 2009Article by Ray Withers
If property is not your thing and you are worried about your green credentials, try taking a leaf out of the alternative investment book.By branching out in to forestry investment management you satisfy your green concerns, while at the same time, your money is growing and providing a better standard of living to villagers in third world countries.For decades, the world’s rainforests have suffered from indiscriminate logging for a quick profit, but more trees are needed to meet commercial demand in a controlled and legitimate strategy as existing forest die back.
Putting cash in to sustainable hardwood forests is a growth industry – and a chance for the eco-conscious to offset their carbon footprint with an ethical investment.
The strategy is a simple cycle of life – the money literally grows on the trees not necessarily in the land.
* Buy a plot of land on a commercial sustainable plantation as a forestry investment
* Trees are planted, managed, thinned and harvested hen they are fully grown
* The timber is sold as sustainable hardwood
* The cycle starts again
Investors also improve their green credentials by offsetting their carbon footprint.
Generally, an average UK family of four produces 18 cubic tonnes of carbon emissions a year, this could be offset by making a tropical hardwood investment in 300 teak trees plus maintenance costs.
A typical investment is Sustainable Timber Hardwood, Anuradhapura, Sri Lanka, offered by UK consultants Property Frontiers, of Oxford.
This investment package offers flexibility on harvesting trees. Harvests are recommended to take place at six years growth to utilise the maintenance and management programmes in place.
Crops are continually monitored for signs of pest and disease and crop thinning ensures that the best plants are selected for development.
Figures have shown that even investing in only 300 trees can produce a staggering profit of at least £40,000 at when harvested. For a minimum investment of £10,000, the investor buys 300 agar wood or teak trees and contributes £5,000-£6,000 towards maintenance costs.
* Agar wood trees are harvested after six years, producing a gross harvest value of £60,000, deduct the timber company’s profit share and the investor’s net profit is £41,000.
* Teak trees are harvested after nine or 15 years, when the gross harvest value is £246,450, leaving the investor with an anticipated net profit of £271,540.
A shorter-term option is available for teak
These projections are based on a lumber price of £0.72 per board foot for the first thinning, increasing at an annual rate of 6% for the subsequent thinning and final harvest. The 5% profit share is retained as a harvest fee.
The timber company has allowed a generous 10% for harvest and processing costs, which covers the milling the trees.