Why invest in forests?

As part of your investment strategy, we recommend the country that is most suitable for your investment. We base this on your preferences, short-term and long-term goals, and local conditions. 

Normally, we establish a company in the state where you want to invest. The company will then purchase forest properties to the extent you define as an investor. 

Do you want to be a hands-on forest owner and participate in the daily management of your forest property? Or would you rather leave the management to Dalgas? We will manage the forest operations, but also the company and even the bank account – it all depends on our agreement. You decide – we are flexible. 

The expected return is 5-6% when you invest through Dalgas. The return is ungeared and net after all costs. 

For Denmark and Germany, you should expect a lower return than in Estonia, Latvia, and Lithuania. However, it all depends on the individual investment. 

Our clients have experienced various returns, but none have suffered losses during our 25-year history. 

• More than 2/3 of our investors have had over 10% IRR
• About 1/5 have had 6-8% IRR
• Less than 1/10 have had 2-4% IRR 

All our managed forests are certified according to either PEFC or FSC® – two globally recognised forest certification systems. 

This guarantees that all harvested wood is produced sustainably and that we in our management of the forests: 

• protect vulnerable natural areas
• harvest fewer cubic metres of wood than grows each year
• leave dead wood for insects and fungi
• ensure new generations after harvesting mature trees 

Investing in Baltic forestry is considered as safe as in any other European country. Estonia, Latvia, and Lithuania are part of NATO, the EU, and the EURO zone. Therefore, your investment has the same advantages here as in the rest of Europe. 

The Baltic countries are known for their open, modern economies with growth above the EU average and high transparency ratings. At the same time, property rights are secure and well-documented with fully digitised systems. And you have low transaction costs when trading properties. 

In Estonia, Latvia, and Lithuania, hunting rights do not follow the ownership of the forests. This means that you do not acquire hunting rights to the forest properties when you invest through Dalgas. 

The expected return of 5-6% IRR is therefore not dependent on hunting but is generated solely through forestry and the increase in property value. 

Conversely, in Germany and Denmark, hunting rights normally follow the ownership of the forest. Therefore, you can (with certain reservations) hunt in the forest if you invest in Germany or Denmark. 

Dalgas offers investments with low risk. Investing in real estate, agriculture, and forestry has always been recognised as safe investments with low risk. Forest investments through Dalgas are no exception. Historically, we have seen a stable development in wood prices and the value of forest properties. 

Risks such as forest fires or severe insect attacks are relatively low because the semi-natural mixed forests in the Baltic Sea region show great resilience. Additionally, your investment will typically be geographically spread over several properties, which further reduces the risk. 

A relatively low forest price. This is clearly the biggest advantage because the price here is significantly lower than, for example, forests in the Nordic countries. Forest properties in Estonia, Latvia, and Lithuania are priced according to their commercial potential to produce wood. This means that recreational purposes or hunting interests do not push the price up, as can occur elsewhere in Europe. 

Additionally, the Baltic timber industry is considered one of the most modern and efficient in the world – and is well integrated into the international market for wood products. Therefore, you are assured of the sale of raw wood from your forest properties. 

In Estonia, Latvia, and Lithuania, forests are priced according to the value of the current timber stock and growth conditions. Prices are almost unaffected by recreational interests or hunting values. 

Geographical aspects such as proximity to industry or port, however, affect the price. Contact us to hear about current prices on different properties. 

Spruce, pine, birch, alder, and aspen are the most common species grown in Baltic forestry. 

Products such as veneer, construction timber, firewood, paper, and biomass are generated from these species. We expect demand to increase in the coming years. Therefore, we expect the value of the forest to be secure going forward. 

We have seen a stable increase in timber prices over the last decade – but in recent years, prices have generally taken a jump up. 

Society is shifting to being bio-based, and there will be a need to replace fossil fuel-based products with bio-based products. In the future, we therefore expect a favourable price development for timber products. 

The return on your investment is generated through the growth of trees and the increase in property value. 

The growth of trees is both stable and predictable. Therefore, you can harvest a quantity of wood each year without depleting the forest. Most timber products are sold to the local industry, where they are processed into refined wood products such as rafters, veneer, packaging products, and paper. 

Each year, we assess your property value, where general economic growth ensures a stable increase in property value. But the value of your forest can also increase due to greater demand for forest or wood and capital growth from younger crops. 

You need to own a certain amount of forest before it is profitable to manage and trade. At Dalgas, we have set the entry threshold at 1,000,000 euros to ensure this. If you wish to invest a smaller amount, we can refer you to partners who can offer an investment in forests managed by Dalgas.

Your investment with Dalgas consists of forest properties that you can sell again at any time. There is no binding period, which is otherwise common in similar long-term investments. 

You need to find a buyer for your forest holding on the open property market. Fortunately, Estonia, Latvia, and Lithuania have a very active forest market, where both private individuals, investment companies, and timber industries are active. You should therefore be able to sell your forest again within a reasonable time when you decide to withdraw from your investment. Through Dalgas' large network of investors, it is also usually possible to sell the forests if a quick or discreet sale is preferred.