Thursday, December 2, 2010

Profitable Plots - Another Land Investment Firm Gone Wrong?

I wrote sometime back warning readers about land banking.

I was just generally uncomfortable with some of the ideas that were being surfaced in the market and after talking to a few friends who had invested in land banking products, realised that the deals might not be as good as they are marketed to be. Of course, I could be wrong and there might be some good land banking deals out there. But for me, I will stay clear of this kind of investment.

Of course, I was not surprised to read in the papers about another troubled investment firm - Profitable Plots which is currently under probe by the Commercial Affairs Department (CAD). I remember their glitzy advertisements during EPL half time match breaks and also saw some of their booths at Great World City before. So I am not surprised that some investors have lost their money. Who can resist such sales tactics?

It seems that 106 investors have lost a combined $9.5 million. Profitable Plots has some 1,000 clients here so I am not certain why only 106 people went to the CAD. Shouldn't all the clients be clamoring for the $60,000 that is left in Profitable Plots coffers? If that is so, each one of them will only be entitled to less than $60. And I hope that they don't need to pay any legal fees for that!

My guess is that some of these clients probably do not even know that Profitable Plots is in trouble. They are probably not monitoring their investments and the news. After all, I also did not know that Profitable Plots was in trouble. I just found out like today when reading the newspapers.

I have said it once, and I will say it again: Beware of any deal that sounds too good to be true.

7 comments:

  1. The papers reported that the company only has 277k left in their bank accounts. What happened to the rest of the 9 million dollars?? I think Singaporeans have to be more careful before they part with their money. Before they sign up for spa packages, think twice or they can kiss their money goodbye any moment. If you are non-Singaporeans studying in a private school in Singapore, beware too. The school can close any time and your fees will be gone just like that. Cannot imagine such things happening in Singapore and worse, they seem to be recurring. Why do we allow such incidents to keep happening?

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  2. Hi financialray,

    You are correct. We need to be careful especially when we are handing people large sums of money!

    I don't know why it is happening. But I guess being to fixated with regulations might affect the business environment around here and make it difficult for business to sprout up? So there needs to be a balance between regulation and some discipline as well.

    The best way perhaps is for MAS to regulate land banking schemes which they are not doing now. I am not sure why they are not taking it up but they must have a reason for not doing so. Of course, all these increased scrutiny and requirements that we hope the authorities to take up will only translate to a heavier burden on the people as they are ultimately having to fund this through taxes. A balanced approach is perhaps the best way moving forward.

    In the mean time, beware!

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  3. I suspect Boron is the S$9M. They made at least S$100m from their Concorde Village green belt land banking site. According to the UK land registry they paid around S$8M for it (3M UKP) and cut it into 9000 plots and the UK Land Registry says its 80% sold. That is 7200 plots at around S$16000 each which is S$115 Million or in round numbers S$100M in gross profit.

    Where is it I wonder ? They cant have spent it all on ESPN advertising.

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  4. Hi Jone P,

    I am not too certain where all the money went. $100M is a lot of money to go missing. I really hope that no investor lost too much money in this.

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  5. I was taking SMRT bus service 184 on 7/5/2011 (election day). There, I still saw profitable plots advertisement. I then wrote a letter to Zaobao readers’ forum asking why such a company is still allowed to advertise….. Well, it seems Zaobao refuse to publish my letter. This is the Singapore we live in today.

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  6. Very interesting article, I like your thoughts about content generation using Twitter. Thanks for this information.

    Houses and Land Packages

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  7. Land banking is the practice of purchasing raw land with the intent to hold on to it.

    Jardin Smith International

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