Landbanking In Malaysia

Land banking is defined as the practice of acquiring large parcels of undeveloped land and holding it until the time is right for future development. Traditional land banking involves holding a parcel of raw land as close as possible to the path of development and wait for a few years. When there is demand for your land due to the approaching development, your parcel of land will increase in value ten-fold or even more. However, land banking requires much patience and investors can go on waiting indefinitely. The cost of holding the raw land can also be crippling.

Nevertheless, land banking investments can be an excellent investment given the right location, proper expertise and holding power. Many have built their wealth on land banking investments ranging from the likes of Donald Trump in the US to Li Ka-shing of Hong Kong. To the average investors however, 3 major constraints prevents us from participating in this lucrative part of real estates investments. They are the lack of capital to purchase large parcels of land, lack of holding power and the lack of expertise to gain the proper planning approvals.

In Malaysia, an article on land banking investments appeared in the financial magazine "Personal Money" published by The Edge on April 2004 and this signifies the growing awareness of a new breed of professional land banking companies. These companies purchase huge parcels of land in the path of development and syndicates it to investors that will then own an undivided interest in the land. A 100 acres of land for example, could be divided into smaller units of 1/2 acre each, making it affordable for investors to purchase a single unit of investment. They also act as your asset management company managing your land investments. Their services includes submitting concepts plans to the authorities to get the proper planning permission and presenting offers from developers that are interested to acquire your parcel of land to all the joint investors.

Investors make their profit by selling their lands to the developer at an appreciated price. Lands that have gained planning approvals will fetch a premium price from developers. The decision to accept any offers from the developer will be done via a voting process that involves all the joint investors. Many Malaysian investors have made lucrative profit from these investment programs and the number of investors are steadily rising.

David Chong is the popular author of David Chong's Investment Blog. Since he cease his popular blog, one of his favorite blogsite which he now reads and recommend is http://www.landbanking.us which serves as an informative guide on landbanking and managed real estate investments.