Timber vs. Land – the role of forest land as a risk reducing factor for a timberland investor in Sweden and Finland

A new Indufor study highlights the sources of forest investment returns and risk in Sweden and Finland. The Nordic roundwood market has experienced substantial price fluctuations in recent years. For example, wood prices increased by more than 20% per annum in Sweden during 2023–2024 and by more than 13% per annum in Finland over the same period. In contrast, wood prices declined in both countries during 2012–2016.

However, a timberland investor considering, for example, disposal of a forest asset is not exposed to the full volatility of the roundwood market. Indufor estimates that forest land prices have reduced the measured forest investment return volatility by 26% in Sweden and 20% in Finland. More stable land prices provide a shield against the wood price volatility. Thus, while the return on forest investment remains sensitive to timber market cycles, large movements in wood prices do not translate into one-for-one changes in the value and return of the overall forest asset.

On the other hand, Indufor research concludes that over the longer 2005–2025 period studied, land price development has had only a marginal impact on the average level of forest investment returns. Hence, it seems that the land prices in the long-term contribute only through reducing the investment risk and volatility whereas the level of investment return is not materially affected. 

In the short term, land prices can, however, affect both the volatility and the level of forest investment returns. In August 2026, declining Finnish timber prices contributed to a -7.5% return over the preceding 12 months while the total annual return on timberland investment amounted to -4.9%, considering also the more stable development of land prices. Thus, the land prices have provided a cushion against the recent downturn in timber markets.

Indufor’s Forest Investment Return Index measures returns on private forest investments using data on timber prices, standing timber volumes, harvests, biological growth, forest management costs and forest land prices, combining publicly available sources with Indufor Data & Technology’s proprietary data. The analysis covers the period from 2005 to August 2026, and the research data represents nearly one million forest owners in Sweden and Finland, or almost 30% of EU wood market.