Friday, May 14, 2010

Beware Land Banking?

On the Straits Times today, it was reported that over 200 investors have lost $6m in British land deals.

These investors had been persuaded to buy to a piece of land in rural places like Swindon and Gatwick in England for $15,000 each through Singapore company Land International (Far East). They had been promised "high returns with regular payouts for three years".

The parent company was shut down by the British government in 2008 following an insolvency probe.

Now, investors literally own the piece of land as they have been given title deeds. They now have to look for a way to dispose of their land in ways that might be costly. Investors will also not find any shelter under the law as land banking is not regulated by MAS or any other Act in Singapore like the Securities and Futures Act (SFA) and Financial Advisers Act (FAA)

"As land-banking investments involve investors acquiring direct interests in real estate rather than securities related to real estate and, as such, fall outside the scope of the SFA and FAA." - MAS spokesman

I do know of people who have invested in land-banking before and my advice or questions to them is always this:

1. Land-banking is not regulated by MAS. You will not get any protection from the law should anything bad happen.

2. If you are investing in land-banking, you are literally buying a small plot of land. Do you really want to own a piece of land in a faraway country which you have never set your eyes on? If I asked you to buy a piece of land instead of presenting it as "an investment opportunity with great returns and proven payouts", would you still be investing in it?

3. If the potential for development is so good, why do they need to sell their land to foreigners? Why aren't the locals or the English buying their own land? Why isn't the company seeking bank loans to just acquire the land for themselves and develop them to keep the profits for themselves? Don't give me the rubbish about regulations stating that blah blah blah...

Many people are often too trusting when it comes to money and investments. Always open your eyes really BIG before going into any investment that promises high returns.

12 comments:

  1. Many people don't really risks and returns

    http://createwealth8888.blogspot.com/2009/09/land-banking.html

    http://createwealth8888.blogspot.com/2010/04/risks-and-returns-part-2.html

    ReplyDelete
  2. At least you can see what is really happening to your stock with your own eyes each day, each hour, each minute and every second if you wish to see

    http://createwealth8888.blogspot.com/2010/04/got-cheated-on-land-banking-oilpods-etc.html

    ReplyDelete
  3. Too many con jobs in this world. As usual, if it is too good to be true, it usually is.

    Beware HYIP - High Yield Investment Programs... something I found out recently. It is a ponzi scheme.

    You can see it on the internet everywhere. These people are without conscience.

    Example:
    http://hyip-review.blogspot.com/

    It does not matter if they own these programs. They are helping to proliferate scams!

    ReplyDelete
  4. Hi FF,

    Spotted a typo :

    "As land-banking investments involve investors acuiring direct interests...."

    Sorry, nothing to do with land banking but it's too glaring not to tell you that :)

    ReplyDelete
  5. Hi LP,

    Thanks for pointing out the mistake =)

    ReplyDelete
  6. In my opinion, invest in singapore bluechip is best. There is no need to bother other investment investments which carry many unknown risks.

    ReplyDelete
  7. By bluechips, I suppose it's STI components? I faintly remember creative tech to be one of the sti components. I'm saying that to suggest the idea that bluechips are not infallible, and they very much require the same kind of attention as other kinds of instruments.

    The only thing that I like about shares vs land banking investments is that at anytime, you can cut your losses in shares. I don't think it's that easy to get your money out of land banking. Not too sure about it, just my gut feel.

    ReplyDelete
  8. Actively manage your portfolio with blue chips that yield at least 4-5% and diversify it.

    Think of Noah's Ark - a pair of each kind is good enough to ensure the survival of the species and you are likely to ensure the survival of your portfolio over your investing life.

    I have seen enough bulls and bears to tell you it works.

    http://createwealth8888.blogspot.com/2010/04/portfolio-management-diversification-is.html

    ReplyDelete
  9. Yeah.. I prefer to have a certain amount of liquidity when it comes to investments.

    Land banking is too illiquid. For such an illiquid investment, the returns must be very high to justify the added risk. Justtoo risky in my opinion.

    If one is really interested in investing in land, why not go to Malaysia or Vietnam and look for land plots there?

    ReplyDelete
  10. The kelong in Batam that I went fishing is owned by Singaporean boss. He bought the land and use part of the sea to build kelong for fish farming and use land to plant vegetables and fruit and rear chickens.

    ReplyDelete
  11. A couple of these companies have been running investment schemes backed by land plots. Typically these were supposed to offer between 10% and 25% per year as well as the huge profit you were supposed to get from the land. Surely these schemes should be covered by the MAS as they are basically ponzis. There is no way they can pay these kind of interest levels without new investors funding it.

    ReplyDelete
  12. Hi CW8888,

    Batam land cheap? Perhaps retirement plan can consider just buy a piece of land and live off it.

    Hi Pro,
    some of them might be ponzis. We never know until they start to miss out on their payments to investors.

    ReplyDelete

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