South American Real Estate News

Eucalyptus Plantation Forestry Investment in Uruguay shows impressive returns

Post available in: English

Uruguay has significant geographic, climate and competitive environmental advantages in modern Eucalyptus timberland plantation forestry, making it one the world’s lowest base cost Eucalyptus producers. The Uruguay forestry model driven by the state-of-the-art world, class pulp plant investments in Uruguay by UPM and Stora Enso/ Auraco has created a vigorous, sustainable and ultimately disruptive forestry model which is changing the dynamics of traditional timber markets on a worldwide basis on a scale last seen in the 1970s with the then disruptive emergence of Chilean and New Zealand plantation grown Radiata Pine on world timber markets.


Uruguay has significant competitive advantages over the more traditional forestry areas in North America and Europe due to higher overall biological productivity (~100%) due to favourable environmental factors such as tree species, climate and geo-topography whilst having a lower overall (~30%) factor cost over the production life-cycle due to lower average costs in land, labour and technology.
Eucalyptus species are optimized for growth in Uruguay. The eventual marketable fibre benefits from a well-established and diversified global off-take network ranging from high-value export-grade sawlogs to a strong domestic pulp log market and a rapidly growing market for top-grade sawn timber.


Based on current market valuations, a forestry investor in Uruguay can reasonably expect to acquire and build a well-structured and diversified Eucalyptus forestry portfolio capable of producing a sustainable un-leveraged IRR of between 8% and 9%. These financial return expectations are primarily driven by the inherent biological growth dynamic of the marketable fibre rather than future timber prices or land price metrics, which have traditionally driven the valuations of timber investments in North America and Europe. Due to this unique dynamic, investment returns in Eucalyptus fibre have historically not shown, nor are they expected to show in future, any significant financial correlation to the wider equity, commodity or traditional forestry industry sectors.

Contact Hector for more in-depth investment information and more answers to these questions.

Source: Hector Laca-Viña (MSc., PhD)

(Visited 620 times, 1 visits today)

About Gateway to South America

Established in 2006, Gateway to South America began as a single office in Buenos Aires. Since then, it has grown into a vibrant regional network, providing professional real estate marketing services to clients in Argentina, Brazil, Chile, Paraguay, Peru, and Uruguay. If you enjoy reading our news site, please share it on your social media!

Want an edge on investing in Latin America? Get our Investment News first: Join 39,400 subscribers without cost to our English, Spanish or Portuguese posts for the latest real estate news in LATAM useful for new and experienced investors. Please note, this subscription is for Investment News only, not properties for sale.

Post available in: English


Make a comment on this post

Your email address will not be published. Required fields are marked *

Real Estate and Investment News from South America
Visit us on LinkedInVisit us on FacebookVisit us on TwitterVisit us on Pinterest