"A buying frenzy in the forest "trumpets the advertisement in the Skogsforum newsletter and the advertiser Landshypotek Bank in Kristianstad encourages remote ownership of forests as "a safe investment". "As the farm and forest owners' own bank, we know how important the forest is for the future and growth of the countryside," the bank writes on its website. How does that fit in with remote forest ownership as a pure investment for a city dweller, I wonder?
I soon realize that this is not just an isolated phenomenon but is the new thing with the banks - to promote the forest as a safe investment. The banks no longer give interest on borrowed capital and now want to encourage more remote forest owners who are looking for alternative investments to the stock market and other traditional securities. Articles have appeared in both Privata affärer and SvD näringsliv in recent years about remote investing in forestry.
Not only Landshypotek Bank but also major banks such as SEB are happy to help investors acquire forest properties and think it is good if forestry is included in the portfolio. Of course, all major banks have specialist expertise for remote forest owners, but SEB is the best at boosting it as a pure investment as part of the portfolio. For the banks, this is a pure number that they make money on in different ways, and the long-term consequences of remote forest ownership as a pure investment are just a little flyspeck on the screen. Environmental analysis - what is it?
In addition, the banks think it is enough to have 15-20% for the cash deposit. The rest the bank is happy to lend so, run a bottom loan of 75% straight off. The banks thus earn good money on these deals and recommend that the beginner buys into 25-30 ha. In addition, the remote owner will not manage the forest himself but will sign a forestry contract with a company, which also makes a profit on the deal. Stora Enso and other companies warmly welcome remote owners to entrust them with the management of their forests and regularly send DR mailings to forest owners to recruit them as customers.
Another actor who earns big money from more forestry transactions is LRF konsult, which, unsurprisingly, speaks warmly of the new wave of remote owners in the media. The brokerage fee is of course paid by those who have been persuaded to sell their forest. But real estate agents never persuade anyone to sell ... how the sharply increased demand for smaller forest properties has been matched with new objects for sale is a mystery. LRF konsult is then happy to help the new owner with financial and tax advice, legal advice, a forestry plan and finally valuation and sale again when the remote owner is tired of his unprofitable investment and wants to sell it.
What do you mean unprofitable? Well, when it is time for the "return" in a couple of decades, many remote owners will probably be disappointed after the settlement from the company has arrived and the interest to the bank has eaten up the small profit. But by then the old-growth forest has already been cleared in small parcels and the only lasting value that the forest can provide over time, namely the natural value, has literally been destroyed by the company's land preparation and monoculture planting. And now that the investment object has lost much of its market value, who wants to buy the small parcel of "forest"? If no one else wants it, the person who has been the manager for the last 20 years can always take it over...cheaply...?
Unfortunately, not all of these actors are as happy to help remote owners as the Foundation. Naturarvet, because forests purchased by the foundation are permanently excluded from forestry and preserved instead, and the whole forest becomes one big natural value. It is not a profitable business for any of the capital market players. Naturarvet Moreover, they are only interested in the only value that banks and companies do not like - the natural value. So if you want to Naturarvet make a reality of what banks and companies, among other things, attract with remote ownership of forest - recreation, and not just for oneself but for everyone - it is not a value that can be managed in a portfolio or can bring in income in the form of advice and management.
The Swedish Forest Agency is also keen to provide advice and training to new forest owners. As soon as Lantmäteriet has made its decision, the Forestry Commission will automatically send out a "Welcome to your forest" letter with instructions on how to access My Pages. It also comes with a sheet about what the agency does, including an offer of contract services such as clearing saw and chainsaw training and advice on e.g. forest management plans. Here the authority is a leader and a competitor to other players in the market.
"Regardless of whether your goal is income, high nature values, recreation, hunting or security for the future, you will benefit from being active and managing the forest well," writes the Swedish Forest Agency, and the terminology feels strangely close to that used by banks and companies to stimulate forestry business and the purchase of forest-related services. Because who believes that high nature values can be achieved through active forestry? There are special cases of deciduous forests that are overgrown that require active measures. High nature values are otherwise best achieved through negligence, which the Forestry Commission is aware of and should also encourage. There is no mention of any common national environmental quality objectives, but the authority at least mentions that the forest can contain many values. alongside as well as the economic and informs on its double-sided A4 sheet that you can protect forest.
The question is how the Swedish Forest Agency and Lantmäteriet view this new type of property formation and ownership? They should be concerned! Lantmäteriet should not approve real estate formation of such small forest properties as 25-30 ha (unless the owner is the Naturarvet is the owner and the whole parcel becomes a nature reserve, of course). This goes against their own guidelines. The Swedish Forest Agency should take a good look at how remote ownership of small properties as a pure investment is compatible with the goals of sustainable forestry in Sweden. How do you draw up a forest management plan that includes nature conservation of 5% on a property of 25 ha? How does it even fit in with any kind of serious forestry to treat "forest" like any other disposable security that is only part of a portfolio, as the banks do? Hopefully, the role of the Swedish Forestry Agency, sitting on many chairs, is not an obstacle to maintaining the sharpness of the authority's mission?
How can we achieve national environmental objectives such as Living forests and a rich flora and fauna and international commitments such as 17% protected land area in an ecologically representative and well-connected network of protected areas by 2020 if big business does not want to get involved? Remote ownership as a pure investment instead works against the common objectives. The point of jointly agreed political positions on the environment must be to be able to make demands on big business about the investments they make and encourage for their own benefit. The number crunchers don't seem to be able to restrain themselves. Then someone else will have to do it! The state has a mandate from the people, so go ahead and interfere with what the banks and companies are doing.
Lo Jarl, Executive Director
Naturarvet
www.naturarvet.se