Global demand for saw-timber and solid wood product remains strong compared with the pre-COVID-19 decade. Solid wood product demand is strong as it is a more sustainable and carbon-negative building material than cement and steel. In addition, underbuilt supply of homes in the United States and other areas of the developed world, the movement to a higher percentage of wood-based homes in various countries and an expanding manufacturing base have contributed to this demand.

While carbon markets are not new, the interest and investment in carbon offsets and projects – by both investors and users of offsets – has accelerated. J.P. Morgan Asset Management believe demand for carbon offsets is likely to exceed supply in the near and longer term. Forests provide the material portion of offsets generated in the voluntary carbon markets with carbon prices across markets expected to have strong support in the coming years. Working forests also provide investors with other tangible ESG-related opportunities, from biodiversity to rural jobs, enhanced through sustainability-focused management, and verified by meeting third-party forest certification standards.

These highlights underpin their expectation of reliable income returns and capital appreciation in an asset class with inflation-hedging attributes. They anticipate strong cash yields for timberland assets in 2023, and rising prices and yields in 2024 and beyond.

Learn more here