Tan Kin Lian's Blog: Avoid land banking

Thursday, October 23, 2008

Avoid land banking

Dear Mr. Tan,
I was in Hong Lim speaker corner last 2 weeks, to listen to your talk and advice which was informative and helpful. You had done an excellent contribution to the society.

Can I seek your advice on the Land Banking which I was being approach to invest.It is a good investment to do.Please give your advice and comments. Thank you.

SL

REPLY
You should avoid investing in Land Banking. Learn from the lesson of Minibond and avoid these types of products.

AFTER NOTE.
If you wish to know the reason to avoid land banking, you can do your research using Google. There are many articles and experiences of people who invested in this product and have not got their money back after waiting for many years. I hope that someone can do the research and make a summary for me to post in my blog.

Some of the people who challenged my views on land banking are the financial advisers who now sell this product. Previously, they sell the minibonds and structured products, which has caused great loss to the ordinary investors.

21 comments:

Junyang said...: Do check out another post from Mr Tan's blog:- http://tankinlian.blogspot.com/2008/09/land-banking-scam.html.

There're signals to indicate that most land banking schemes may be a scam.; October 23, 2008 9:09 PM
Anonymous said...: Dear Mr Tan
Thanks for the advise but apparently a lot of FAs are marketing it. Now we have to deal with FIs, don't tell me next will be FAs. I hope MAS will clamp down on FAs who market such products if they are not regulated or approved by MAS. Something wrong somewhere. I have a friend who purchased it 10 years ago when she was @ 65, todate have not recovered and 'they keep on promising her empty promises'.; October 23, 2008 9:46 PM
Anonymous said...: You ask me I ask who? Use your deduction power and ask yourself investing some land thousands of KM away that you dont know where,is it safe?; October 23, 2008 10:27 PM
Anonymous said...: Mr Tan, Please elaborate when you tell people not to invest in Land Banking. Making sweeping statements like this without further elaboration is one-sided and unfair, especially when thousands read your blog everyday.; October 23, 2008 11:51 PM
Anonymous said...: Run away as soon as you hear landbanking. No landbanking customer have ever made a profit from it.; October 24, 2008 12:12 AM
Anonymous said...: In the past, I was extremely sceptical about Land Banking, so I did not take up the offer. However, my friend (name him A) bought it and actually cash out few years later with almost twice the amount he invested . I was dumbfounded. So this is a real personal story I heard. Maybe this is a carrot dangling by the Land Banker, now he plunges in again to invest in another plot of land with all the previous profit plus his saving. Let's see what happen in a few years time. Now the story of my other friend (name him B), he has been waiting his first land banking to materialise for 7 years. According him, it doesn't look good ....

- OTB -; October 24, 2008 9:17 AM
Anonymous said...: I would really advice to be "kiasu" right now, ie, do not invest in anything. Evertthing is so unpredictable. Moreover, if its too good to be true, it probably is. Keep your money safely now.
.
From : James; October 24, 2008 9:22 AM
Tan Kin Lian said...: Hi Mr Tan,

Recently Oilpod, an investment in oil production in the US went bust.
It affected many small investors on the streets. All the investments became zero over night.
The investments were sold in lots of USD 5000.

Dont really know what happened. Only receive letter from Oilpod informing about everything
gone. And there is little they could do.

Could you shed some light on this and is there anything the consumers can do?

Regards,
Shawn.

REPLY
I have no idea. People should avoid investing in these types of exotic products, including land banking.; October 24, 2008 9:35 AM
Anonymous said...: http://en.wikipedia.org/wiki/Land_Banking

You will find all the pros and cons here about Land Banking summarized. It doesn't contain all the information about this sort of investment but its a good starting point for your search to understand the risks Land Banking entails.; October 24, 2008 10:42 AM
Anonymous said...: I recently attended a talk on land banking seminar. It says can get 23% annualized return (audited). It is definitely not a short term investment. One must be prepared for a 5-7 time horizon. There is country risk meaning the government of that country if they decided to disapprove certain thing (example, water supply line) on that plot of land then it can't be developed. As you know government can say something today and tomorrow change regulations. Land banking is illiquid, example 100 investors invested in this plot of land in Canada. Everybody will exit in 5 yrs' time and if you want to exit after 1 year, there may not be a readily buyer. You will be offered a low price to take over your investment.

Did you know that during the waiting period for raw land to turn to $$$, you have to pay interest to look after your raw land (the presenter of the seminar of course dare not reveal this information. I got it from a friend of mine who is an IFA).; October 24, 2008 2:03 PM
Everlearning said...: Look for yourself what is happening now when Singaporeans' investments turned sour.

Government bodies and financial institutions turned their backs and failed to come forward to settle this issue justifiably.

Land Banking is overly speculative and highly sophisticated kind of investments. You are betting on terms that could go wrong should they change the law policies on selling their land.

The Government should be the prospective buyers and not the citizens!; October 24, 2008 2:55 PM
Anonymous said...: Ok, since minibond is so hot these days.. Let us do a simple comparison.

Minibond was noted as being sold to investors in HK, SG, TW but NOT in US. Why?

Land Banking/Development Banking sells land plots to HK, SG,TW, etc in different countries BUT NOT in the HOME COUNTRY of the LAND plots (eg Canada). Why?; October 24, 2008 3:06 PM
Anonymous said...: In view of what is happening right now, I hope the media will come forward and exposed these form of investments. Some of these reputable IFAs maybe driven by 'greed' as I understand the commissions are substantial. As investors are wary about banks, now is an opportunity for these 'scams' to come in.
Mr Tan, in the light of your speaker's corner session, you may want to caution investors, if not 'history' may repeat itself.; October 24, 2008 4:34 PM
Raymond T said...: Land banking is to me what structured products and toxic lehman bonds are to their investors.; October 25, 2008 6:54 AM
LeeSeng said...: Sometimes you get better financial advice from newpaper instead of strait times? eg, DrMoney column vs Invest section? Wink, competition is good.

Anyone has relevant land banking article in strait times sunday? I remembered i read one, but i don't have strait times online, and old copy are already being kalang-kuni-ed.

if you missed reading newpaper Dr money, here is it.

http://newpaper.asia1.com.sg/columnists/story/0,4136,-2363,00.html; October 29, 2008 3:04 AM
Anonymous said...: See this post as well. Some interesting links in the comments section. Less than 10% of your investment is in land !

http://tankinlian.blogspot.com/2008/09/is-all-landbanking-scam.html; October 29, 2008 9:39 PM
Anonymous said...: Spiderman said,

If all investors in land-banking were to withdraw or run for their money that what happens?
Some land-banking company try to call themselves development banking but I only know Development Bank of Singapore so you see the difference?; November 12, 2008 11:18 PM
Anonymous said...: Jason said:
Good Question on why some LanBanking/Development Banking companies selling land in SG/TW & HK......The REASON maybe that the Canadian SECURITIES COMMISSION will whack them hard for their dubious advertisement!
Buy only from reputable Canadian registered Companies....Avoid UK LandBanking at all cost!; November 17, 2008 11:52 AM
Anonymous said...: One of these is clearly wrong.

1: UK Times Housebuilders face market implosion.

"Builders, including Taylor Wimpey and Barratt, are exploring the possibility of selling parts of their so-called strategic land portfolios – land that hasn’t yet got planning permission.

However, residential land values have already plunged sharply and the HBF [House Builders Federation] says that large swaths of residential land – even with planning permission – have already been rendered worthless in the present market conditions.

The HBF said that in some cases land can even have a “negative value” – in other words it would cost more to build a development there than the total value that could be achieved by selling the homes.

One sector watcher said this weekend that some builders are selling land back to the people they bought it from even though they are getting a third of the price they paid for it because they are so desperate to sell."

2: Channel News Asia advert Prime London Real Estate - Estimated 250% returns in 3 years; November 18, 2008 8:53 AM
Anonymous said...: Jenson,

Hope MAS will put the brakes on MIS-SELLING by LandBanking/Development Banking if things are not right!; November 18, 2008 10:49 AM
Anonymous said...: Very Interesting Story published in today's ST.....I just come to know more about only today:
Youngest Ex-NTUC CEO, Ex-PAP .....and now aspiring to be Elected PRESIDENT or elected MP.
perhaps 10% of 100,000 supporters is no problem as there is already 10,700 affected investors maybe there for you.....only time will tell!
Wishing you all the BEST!; November 23, 2008 9:56 AM