Land Banking: Secret Recipes to Wealth?
Land Banking has become very popular nowadays. This investment is traditionally reserved for the very rich; as they are the only ones who can afford to buy hundreds of acres of land parcels that cost millions of dollars. However, through a unique joint venture program, Land Banking is now available to within the reach of everyone. Now a number of companies have opened up this investment to a wider audience.
Whenever you visit the property fair, for sure you won’t missed name like Walton International Group, Land International, Strategic Land Investment, UK Land International and many more.
I was invited by a mutual friend to attend a talk by one of the top Land Banking company last week at Kuala Lumpur . Here is what I gather for about half hour talk.
What is Land Banking ?
Land Banking simply involves the acquisition of land, which does not enjoy planning consent, in advance of expanding urbanization. The price of an open space plot, not immediately subject to urban development pressures is low. When urban expansion occurs the land rises in value when planning consent is granted.
Land Banking is an alternative form of investment in solid ground whereby the investors are purchasing a piece of land collectively in Canada or America or UK . Each investor is required to sign sales and purchase agreement with land office in the respective country.
The way to make big capital gains in land banking, involves buying land in specific areas in the hope of future development.
It is exactly like what a local developer is doing in areas for instance Puchong, Damansara and the Mines . Land price escalated over the period via value-added process as well as natural appreciation. Mutiara Damansara of Selangor for instance was purchased by SCB Developments at RM15.88 per sq ft in 2000. It was subsequently sold at RM157.00 per sq ft in 2003. Enormous return with Land-Banking with 10X growth in 3 years! ( 6 Oct 2003- The Sun,)
How Land Banking work?
Stage 1
2-3 years of research on a particular potential land will be conducted. At the same time, analyses the demand of the land for residential or industrial needs for further development.
Stage 2
Upon confirming the potential of the land, the land banking company will acquire the land.
Stage 3
The land banking company will convert the land title and develop a master development plan.
Stage 4
Actively look for potential developer / buyer and sell the land with development plan to yield return.
In short, Land Banking is the process of acquiring a parcel of raw land or undeveloped land and enhancing the status of the land by formulating the concept plans and submitting the plans to the authorities for approval.
As the value of the land increases tremendously once approval is received from authorities, the land will sell to developers with significant returns.
“Don’t wait to buy land. Buy land and wait.” – Will Rogers
Advantages of Investing in Land Banking
Attractive Return – Walton International Group claimed their track record is above 10% pa(simple return). Many of Walton sales rep and managers are investors themself! Most of their sales are repeat sales and Asia region alone capture 50% of the sales total sales Volume.
Portfolio Diversification – land banking investment offers an opportunity that isn’t directly correlated or tied to the movement of other standard investments. This offers clients a unique opportunity to bring diversity to their portfolios
Minimum effort by Investor(Dummy Investing) – No Service or management charges to pay. Just invest one lump sum and wait for about 3-6 years to reap the expected return. It offers a hassle free investment because you pay your initial investment, and you don’t have to think about it until exit. Very suitable for who do not have the time/education/patience to study and do research
Land is a finite resource- The key to land investing is to buy in countries with a shortage of land and a growing economy and population that will make prime land locations rise in price as they are developed
Disadvantages of Investing in Land Banking
(What “they” prefer Not to Tell You in details)
Minimum Liquidity – You are expected to hold the investment minimum for 3-6 years for the land price to appreciate. Early exit will result loss.
No guarantee on Exit – Companies operating these schemes are seeking investors to buy plots of land in areas which HAVE NOT YET been granted planning permission. There is no guarantees on how soon developers will buy over the land. Estimates by landbanking companies range from a period of three to eight years, to five to seven years.
Basically the companies will apply to convert from agriculture to Commercial land status from the Government. Government may changed their policies anytime.
Land is located Oversea – You do not know the real value of the land, except the promise of the marketer that no investor had sold the land at a loss.
Land banking is unregulated , and thus falls into a legal grey area. This could pose problems if disputes arise between companies and individual investors. You cannot complaint to Central Bank of Malaysia (Bank Negara Malaysia) for dispute as land banking is not under its purview.
In November 2006, UK landbanking company, Land Heritage (UK) closed down after an investigation by the Financial Services Authority. Its 700 investors were not refunded.
There is NO perfect Investment . Therefore Investors need to do their due diligence before investing.
As my property guru, Milan Doshi, always say all is depend on your Unique Investment Profile!
For those who have experience in Land Banking , please share your feedback on the comment below.
I am just sick of the way the landbanking salespeople are selling these days.. I still believe and have made money on landbanking…
Oh yes, i heard about it.. i am just trying to find out where the offer is coming from…??
Hi no_more_land,
Yes, some unethical salespeople are a nuisance and I agree with that. Just find the professional and good one who could service you for your investment portfolio. No point complaining. Just do the right thing.
Do not have full information now. Will post when I have it.
Hi Yvonne,
Your news is up-todate on Walton latest exits!
Did you invest? Me not in this project but in other Walton’s projects.
Hi Yvonne,
Your comment : “Anyhow, just to update that there is an offer today for a project in Edmonton called Big Lake 2”.
Yes! you are right………the syndication of Big Lake 2 in Edmonton – completed in 2005 at C$67,500/- per acre and I understand Offer of C$140,000 per acre subject to voting. Not bad for 5 yr. investment .
Hi land0rama,
You are also quite updated ya !
Syndication price : C$67,500
Exit Offer : C$140,257
Based on 5 years duration …
Gross ROI before tax : 21.55% per annum
Net ROI after tax : 16.28% per annum (rough calc)
Not bad la .. above 10% per annum.
I din invest in this project but I have others. Still waiting for exit !
Hi Yvonne,
Bet you are in safe hands!……..expect more EXITs in the next 18 mths….starting 2010 mostly in alberta,cn.
good networking pays off. (Not W agent just landOrama)
BTW: landOrama stands for land investor(me) who delights.
Hi LandOrama,
Yes, waiting for the news. BTW, if the project exits happen as I planned, I will have exiting projects annually which will serve as passive income. Then can retire liao. That’s the goal.
Hi Yvonne,
Best Financial Planning is to invest in genuine Predevelopment Land Bank Investments & Cashflow type.
Ignore the many many critics in whatever Blogs that despise landbanking altogether. All investments come with Risk.
Black sheeps are everywhere in landbanking / property agencies / insurance agencies / and many many so as to make a quick buck and tarnish the good names of those in business.
No venture no gain, fear of investments? better put your money under the pillow with ‘0’Returns or chances of losing it to someone.
Why is it we don’t hear much about Jardin Smith? or the land they buy?
Did anyone check whether the title as stated in the SPA really belongs to them?
What about the recent award to them for Business Awards 2009 last 2 weeks, graced by Datuk Mukhriz himself. Why didn’t we read it in the newspaper?
However, all those googling on all landbanking to date, i cannot find whether Jardin is involved in any scam.
Did any of their land purchases in the UK went sour?
Heard that they had land banks in the Reigate Surrey,Durham, Titchfield and Water Orton and the latest Gerrad Cross.
Hi Karen,
Agree with you on the limited news about of Jardin Smith and don’t really know why???
A savvy investor will look out for audit reports as a form of track records in any Land Exits (sales).
Many dodgy companies do not come clean on “Track Records” and their only track record I come across, is to close shop,fold up or windinding up after having done or had enough scams! thus making an Exit themselves altogether.
The 1 Big company with the “W” HQ in Singapore that I know, delivers “Wealth” constantly!
Hey guys,
Walton launched a 2 – 4 years short term project in Atlanta and a 4 – 6 years one in Texas.
The Atlanta project is zoned for industrial use and very near to current development. A good one to pick up ! 🙂
Halo,
Got more info on both projects and the Atlanta project is zoned for Commercial use not Industrial. Sorry !
Peak Commercial
Unit Price : USD10,000.00
Estimated Timeline : 2 to 4 years
Total Acreage : 157.12 acres
Acreage price : USD121,563.14 (USD2.80 per sq. ft.)
Zoned as commercial. Located in Gwinnett County, Northeast of Atlanta City, Peak Commercial is in the growth corridor, fronting Highway 316 and 29. Note that 500 meters away from this property is the Atlanta’s 2nd largest distribution centre and this is the last piece of commercial land available for development in this region. Also, 2.5km away from here is the municipal airport which has been given the authority by FAA to explore on privatisation to a commercial airport to cater for numerous commercial and distribution centre in this area. Its only 45 minutes from Atlanta.
For info this is the first ever project since 2002 that we are launching a ZONED COMMERCIAL land. Due to economic crisis we manage to buy this LAST piece of land commercial land in the fringe of development from a distress owner who can’t pay their mortgages.
NOTE that PEAK COMMERCIAL is
· Only 45 minutes from Atlanta and the world’s busiest airport, moving goods and services.
· Last piece of commercial land on the fringe of existing development. Grading is already taking place next to this project.
· 2.5km away from Municipal Airport which is currently undergoing expansions for privatization to become a fully fledged commercial airport to cater for the many commercial outlets for the purpose of distribution.
· ∏ km away from the 2nd largest distribution centre in Atlanta.
· Surrounded by 10 other subdivided residential development, already under constructions.
· Excellent location with double frontage to the property. Highway expansion next to the project due for completion by 2012, to connect to I-85 and Highway 316, making this a very valuable asset.
· Note : due to its commercial location, two Fortune 500 companies, NCR and AGRO have just moved into this region (only 6 km away from our project).
Tiger Estate
Unit Price : USD10,000.00
Estimated Timeline : 4 to 6 years
Total Acreage : 323.501 acres
Acreage price : USD32,952.00 (USD0.76 per sq. ft.)
Zoned for residential, this piece of land located along the Highway 142 in the Austin-San Antonio corridor. Stability, growth and Master Plan demands are the factor in the growth for the area.
· Texas GDP – USD1.3 trillion (the size of the Canadian economy), the No. 1 State for job creations between 2008 to 2009 and the No. 1 destinations for domestic migration.
· Part of a 7,000 acre master plan owned by Walton (Walton is the largest owner of Pre-development land in the area)
· 5km away from San Marcos Municipal Airport. This parcel is fully connected and integrated to surrounding highways.
· Surrounded by the largest housing developers who are currently constructing residential communities (which are on its final stages of completion, creating the need for more land absorption).
· 5km away from a newly finished hospital to cater for future use due to the migration moving in.
· Samsung just invested USD3.6 Billion to upgrade their facility bringing in 500 new jobs & Dell just increased their production by adding on another 5,000 new jobs.
Hi Yvonne,
I like to invest but am cautious about 21.12.12 APOCALYPSE. better spend before end times!
Hi landOrama,
Of coz dun invest all la. Spend some, save some. We kenot predict the future for sure.
🙂
2012 details:
youtube.com/watch?v=11iCmzGnOI8&feature=fvw
Hi landOrama,
We could not predict future. What we individual could do is manage and plan what we have now and enjoy our life to the fullest every moment. Life is a risk and while we are still living, we should be optimistic and do the right thing.
Anyhow, I have taken up a unit of Tiger Estate. A good one to pick up.
Also, some updates I got from the President is that they are looking into potential 500 million of exits in the pipeline for the next 1 year. Hope you will have some in the list.
Hi Yvonne,
sounds like Tiger (Wood’s) Estate(joke) in the US???
anyway 2012 is just a warning of things to come!
you got it rather mixed up of 500 Million exits, probably S$500Million worth of Exit proceeds.
from sources: approx. 2,500 acres of land Exits in the next 18 mths. worth probably CAN$350Million in EXIT proceeds mostly in Alberta side. (as CAN$ mentioned) …..kind of tips!
Hi LandOrama,
Ya, sorry, you are right. I misquoted it. It shld be CND350 million worth of exit. Will be Alberta and Brant.
🙂
hai, i think i’m new person in this comments. i’m just received a call from this Amy from Jardin Smith Int Publicity Buffet Function @ The Sunway Resort Hotel Bahamas. She said no selling the product just heard a talk around 30 – 40 minutes, have lunch or tea time and last get boucher rm 100.00. Any idea? please
Just go with Open Mind…anyway, at the end you still will get rm100 Voucher 🙂
Azlena,
Jardin Smith is also offerring landbank products in UK. I was invited before and did get a free lunch and RM100 Jusco voucher. But not before get drilled to buy on the spot with discount offer if we make decision on the spot !
I hesitated as there were no track records and the company was just set up in 2006.
However, don’t take my word for it as it was base on my experience only. Go and see for yourself.
🙂
Yvonne
Those who invest in lands in the UK, may I say “Best of Luck”.
Treat yourself with the gift vouchers if any, and try your tai chi skills to see who KENA?
Dear North Warwickshire Borough Council,
I wish to determine the status of the agricultural land to the
South & South-West of Plank Lane, Water Orton. I would like to know
in particular whether Planning Permission has been sought – in
outline or full – for development for residential housing.
Jardin Smith in Singapore have been offering Water Orton land in
small plots to investors. Jardine Smith claim this land has
potential to gain planning permission in the near future under a
scheme known as Land Banking.
While Jardin Smith have not committed to converting this land for
building they have indicated that conversion is likely in the short
to medium term based on their expertise in gaining planning
approvals.
Can North Warwickshire release any related correspondence and
responses exchanged relating to this site to enable me to make an
informed judgement on the risk of otherwise of development
occurring in the short to medium term. Specifically I would like to
know if Jardin Smith has recieved any communication from North
Warwickshire BC indicating the possibility of gaining planning
permission.
Could you also advise of any instance in the last 10 years where
North Warwickshire Borough Council has approved the conversion of
Green Belt Land for the development of housing or other commercial
use.
This land plot has been identified as WK 441083.
Yours faithfully,
J Piper (Mr)
am sure given all the negative press on Land Banking you could guess the answer but here it is anyway.
No planning permission has been sought for, or granted to Jardin Smith,
for residential development in Water Orton.
Indeed it would be very rare for any planning permissions to be granted
for residential development in Water Orton on Green Belt land. This is
because residential development by definition is “inappropriate”
development in such a location. It therefore carries a presumption that
planning permission will be refused. This is Government Planning policy as
well as that of this Council.
Planning permissions can be granted on Green Belt land, but the applicant
has to convince the Council that there are “very special circumstances” in
order to override the presumption as set out above. “Land Banking” would
in my view not constitute such a circumstance.
Jeff Brown BA, Dip TP, MRTPI
Head of Development Control
North Warwickshire Council
Quite latest on this forums:
forums.hardwarezone.com.sg/showthread.php?t=2593117
The Commercial Affairs Department (CAD) steps into Profitable case
SINGAPORE – In May, the Profitable Group was placed on the Monetary Authority of Singapore’s (MAS) Investor Alert List. Now, Today understands that white-collar crime busters have stepped in and begun a probe into its dealings.
The Commercial Affairs Department (CAD) investigations are said to have followed numerous complaints against the six-year-old land-banking company, which promises exceptionally high returns of between 12.5 per cent and 900 per cent on investments ranging from real estate in England, to fuel products and art.
Land-banking is the practice of speculating on land in the hope that it could be developed for residential housing or commercial purposes.
Not all CAD probes unveil wrongdoing. A police spokesman said in an email reply: “It is inappropriate to comment on police investigations, if any.”
This newspaper’s efforts to reach the company’s management by phone and by an email address provided on the company’s website were unsuccessful.
When MediaCorp visited yesterday afternoon, the company’s Stanley Street office was closed.
There were no signs that the office workers had packed up the place. Neighbouring tenants could not recall when the office last opened for business.
A couple of months ago, more than 50 disgruntled investors turned up at the Speakers’ Corner to vent their anger at the group following failed efforts to get their money back upon maturity of their investments.
Another dozen or so confronted operations director John Nordmann at the group’s office, which boasts a staff strength of about 100.
These investors were said to have invested between $3,000 and $200,000 in various products. Conrad Raj and Teo Xuanwei
fr:todayonline.com/Hotnews/EDC100820-0000072/CAD-steps-into-Profitable-case
Does anyone know the number of investors with Profitable Group(PG)?
Hi Alan,
Thanks for the advise and information. I felt very useful and awareness too.