Land banking is outlined as the practice of taking giant parcels of undeveloped land and holding it till the time is right for future development. Traditional land banking involves holding a parcel of raw land as near as feasible to the trail of development and wait for some years.
However, investing in land needs much patience and backers can go on waiting indefinitely.
Nevertheless, land investments can be an excellent alternative investment strategy given the right location, correct experience and holding power.
In Malaysia, an article on land banking investments appeared in the fiscal mag “Personal Money” released by the edge on April 2004 and this signifies the growing awareness of a new kind of pro land banking corporations. These corporations purchase large parcels of land in the trail of development and syndicates it to backers which will then own a total interest in the land. One hundred acres of land for instance, might be split into smaller units of 0.5 acre each, making it affordable for stockholders to buy a single unit of investment.
Their services includes submitting ideas plans to the authorities to get the correct planning authorization and presenting offers from developers that are interested to get your parcel of land to all of the joint stockholders.
Investors make their profit by selling their lands to the developer at an appreciated cost. Lands that have gained planning approvals will fetch a premium price from developers. Many Malaysian speculators have made money making profit from these programs and the quantity of speculators are continuously rising.