TITLE:
Factors Affecting Swedish Forest Property Prices
AUTHORS:
Sofia Carlsson, Lars Lönnstedt, Torbjörn Sundelin
KEYWORDS:
Bidding, Faustman, Forest Estate, Market Value, Net Present Value, Standing Volume, Value, Winner’s Curse
JOURNAL NAME:
Open Journal of Forestry,
Vol.4 No.4,
July
31,
2014
ABSTRACT:
Historically the price of a
forest estate has, at least in Sweden, been closely related to the financial
return from the estate, but this connection no longer seems to be that strong,
other factors that previously had limited influence on prices now add to the
price. Factors like site productivity and age distribution affect the financial
return of a forest estate but is it obvious that these factors still influence
prices as they once did? Over the last 20 years, the price of forest estates
has increased dramatically. If development of prices has led to a weakened
connection between return and price, could this be explained by the fact that
previously price affecting factors have less weight when valuing forest
estates? The purpose of the study was therefore to investigate how a number of
factors influence the forest estate price; including site productivity and age
distribution. The results shows that neither site productivity, nor age
distribution have a significant impact on the forest estate price. What mainly
influence the prices seems to be the standing forest volume on the estate and
region. The development of the prices seems not only to have influenced the
relationship between the return from the forest and the prices, but also
minimized the influence of factors like age distribution and site productivity.
This means that estates that are bought within the same region, at the same
price per cubic meter, can have considerably different potential to gain
financial return.