Tan Kin Lian's Blog: Malaysia act against land banking

Tuesday, October 28, 2008

Malaysia act against land banking

Hi Tan,

On the subject about land banking, how come the relevant authorities here not taking action whereas our neighbouring country is taking action.

http://www.malaysianbar.org.my/legal/general_news/companies_commission_raids_three_companies_over_illegal_land_investments.html

I believe that Malaysia is not exposed to Lehman Brothers Minibonds but doing something as a watch dog!

JLN

23 comments:

hongjun said...: I even notice Profitable Plots is making TV ads appearances in marketing their 8,000 pounds U.K. land on Channelnewsasia.

hongjun; October 28, 2008 12:36 AM
Monsoon said...: just saw the flash advert today, same thoughts goes thru my mind. again this is another case, cannot overregulate, buyers beware.

The highly paid officials can act against newton hawker touts but cannot act against landbanking.

After some time now, they have crack down on misleading selling of airtickets but why, isnt it also buyers beware? why disallowed the advertising of Zero dollars airtickets?; October 28, 2008 1:37 AM
Anonymous said...: Well out there there are many Financial Advisers selling Land Banking. These companies are really tarnishing the image of the industry. Maybe these FAs are driven by high commissions and lucative incentive trips at the expense of the investors. MAS should take immediate action against these FAs, publish their names and if possible imposed a banned. I hope MAS will not just sit wait and see just because they are in MAS committees like the FIs.; October 28, 2008 5:38 AM
Anonymous said...: old man said.-
It is unwise to inveest in something, somewhere far away, you can not feel, you can not touch and your foot is not on the ground.; October 28, 2008 7:46 AM
Anonymous said...: Time to get real take action to clean up the LandBanking industry by separating the Good ones with proven Track Records to those that are dubious!....Remember "good wine need no bush" Attend to some LB seminars and compare TRUTH vs.GIMMICK???
Millions$$$ have been pumped into such investments and if the so called good ROI why aren't their citizens buying in the first plce? why market here?......1st sign of Suspicion..........the list goes on until you realise "Caveat Emptor" which can be little too late by then!
Banks can go burst what about LandBanking?......my heart goes Bang Shangalang!!!; October 28, 2008 8:53 AM
Anonymous said...: This Blog is an eyeopener for many useful reports!
I've been approached by some Financial Adviser selling LandBanking as this seems to be the hottest product todate!....Just listen and be entertained after all it is free.
Reputable companies will survive as those in UK lands are scam in many ways www.propertyscam.org.uk; October 28, 2008 9:04 AM
Raymond T said...: They sell hope. Reality is another matter.; October 28, 2008 10:07 AM
freeier said...: only asians are that hardup for land.
that's something the europeans realized and tried to take advantage of.; October 28, 2008 12:44 PM
Anonymous said...: yaya,

LandBanking is a good investement but being tarnished badly by irresponsible ADs. made by unproven companies! Only risk is Earthquakes!!!; October 28, 2008 4:36 PM
Anonymous said...: HongJun

It is Profitable Group advertising on Channel News Asia not Profitable Plots. In the advert they offer estimated 250% returns in 3 years. I am personally amazed that CNA is running this advert but not sure how they vet adverts.

I got the following response from Hounslow Council Planning Department in the UK on Concorde village. This is the exact unedited text below.

["I can say that under current circumstances there is next to no chance of a residential development being approved on land that I know is being marketed by Profitable Plots. This is land that Profitable Plots has apparently called 'Concorde Village'. The reason for this is that the land is identified as being within the Metropolitan Green Belt in the Hounslow's Unitary Development Plan. It is also a nature conservation area. You can read the relevant UDP policies at www.hounslow.gov.uk
I can not predict with any certainty what the situation will be in three or four years time but I am not aware of any firm indications that the development plan situation will change within this period."]

Perhaps the Profitable Group could comment on why they believe this site will multiply in value by 2.5 times in 3 years.; October 28, 2008 9:49 PM
hongjun said...: Profitable Plots is part of Profitable Group.; October 28, 2008 10:31 PM
hongjun said...: Forgot to add the link

http://www.profitablegroup.com/division-plots.aspx; October 28, 2008 10:32 PM
Anonymous said...: Ah Beng said,

Any doubts about UK LandBanking go to www.propertyscam.org.uk and www.fsa.gov.uk
What puzzles me is when a Canadian Registered Company here selling US land a US Registered Company selling Canadian land.....You go find out and ask yourself ???
If only Coonfusius know the answer than I will invest without doubts!; October 29, 2008 9:32 AM
Anonymous said...: Ah Huey,
Confusius says "Do unto others and others do unto you"
So if you are a Canadian Registered company......better stick to you goal and sell Canadian Land whereas if you are a US Registered company then better sell US land, this will not confuse the issue and make Confusius confused too!
Cannot understand!; October 29, 2008 1:38 PM
Anonymous said...: Chris C. Sorry but your math is wrong when you say the land value needs to increase 2.5 times. It needs to increase 40 times or 4017% or more to get a 250% return on the sum invested !
Just to break even you will need a net sale price of 16 times 2006 land value.

I don't know if the new 8,000 UK Pounds Profitable Group plot is the same size as the old 5,625 UKP Profitable Plots plot because plot sizes are not listed on the PG web site. I will use the old Profitable Plots data to be on the safe side.
Data source: http://www.concordevillage.com/price.html
Land size 120 Acres
PP were Selling at 5,625 UKP per 8x8 Yd Plot
120 Acres = max 9075 plots

Data source: http://www.propertyscam.org.uk/htdocs/hounslow.htm (free) or http://www.landregistry.gov.uk/ (you have to pay a fee)
Profitable Plots paid 3.15 Million Pounds for the 120 Acre Hounslow site end 2006. This was close to the UK property bubble peak. The actual peak was Mid 2007.

Data source: http://www.bt.com.bn/en/local_business/2008/03/29/profitable_plots_sales_in_brunei_growing
Profitable Plots said 9,000 plots to be sold in total so I will use 9,000 and not 9075 in this calculation.

Divide 3.15 Million UKP by 9,000 and you get a raw land value of 350UK pounds per plot.
To get a 250% gain on 5,625UKP investment you need to achieve a net sale price of at least 14,062UKP.

The land value of the plot is still 350 pounds without planning permission. It may be a little less now because of the current UK property bubble bursting but use 350 to be safe.

14,062UKP / 350UKP = 40

The raw value of the land needs to increase by 40 times or 4017% to give a 250% return on your investment in 3 years.

If the new 8,000UKP plots are still the same 64Sq yard size you need 20,000 UKP / 350 UKP = 57 times or 5714 % increase on the land value to get 250%

As mentioned elsewhere most of your investment is not in the land but a proposed service to get planning and then sell the land. Its the value and quality of that service you should be evaluating in considering this purchase.

** Note
1:The profitable plots websites with the old pricing and details have all been taken down. The concorde village site mentioned above may be taken down soon but this data was valid on 1st November 2008
2: The above calculations do not take into account
a:) The decline of the UK Currency against Singapore Dollar since Q2
b:) The decline in UK property values since mid 2007; November 01, 2008 10:16 AM
Anonymous said...: James

sorri my bad words. I agree with your point. For the investment to go up 250% the land needs to go up much more. The current true land value appears to be less than 8% of the plot investment. I wonder if it was possible to get a 50 times return on land in London in less than 5 years why anyone would need to advertise the plots on Singapore TV ?; November 01, 2008 4:14 PM
Anonymous said...: This Profitable Plots quote from 2007 (when UK property market looked much better than now ) says 7-10 years for return. Profitable Group TV advert says estimated 3 years. Is there advertising standards system in Singapore who would review this ?

Quote is here.
http://www.bt.com.bn/en/local_business/2007/10/22/no_overnight_returns_for_land_investment

"THE dramatic rise in land prices in recent years, makes for a good argument to invest in real estate, land company Profitable Plots Co said.

But investors who purchased land overseas should not expect overnight rewards as land banking investments can take up to 10 years before showing returns, according to Group Operations Director Andy Nordmann."

"Nordmann said Profitable Plots, which he said is a "land company, not a UK land company", would typically tell clients to wait seven to 10 years to see returns on their investments. "We would say go ahead with the investment, but we don't want people to think it's going to happen in the next six months. It's not a short-term investment," he said in a phone interview with The Brunei Times from his Singapore office.

When clients ask when they can expect returns from their investments, he said, " There's no fixed date, but they have reasonable expectations."

The firm acquires land in the United Kingdom because "that is where the best returns has been", he said.

"We got clients the best window of opportunity in the UK."
[end quote]; November 03, 2008 4:25 PM
Anonymous said...: Govin said,

If Malaysia Bar Council has taken action on Profitable Plots/ UK Land and Edgeworth Properties then why no action here on some of them....any answers? Maybe with the Minibonds & Structured Deposits saga and Oilpods episode that no manpower to deal??; November 12, 2008 5:45 PM
Anonymous said...: Avoid any investment that away above 30km from where U stay(familiar)!

There is a lot of CON man...looking for SUCKERS! BEWARE!

More on WHAT THEY Don't Wanna YOU to Know on Land Banking here
Land Banking: Secret Recipes to Wealth?; November 16, 2008 6:42 AM
Anonymous said...: article from todays New Straits Times

Profitable land banking scheme or clever scam?

2008/11/23
KUALA LUMPUR: Some 2,000 Malaysians have invested over RM50 million in foreign land banking schemes.

The Companies Commission of Malaysia (SSM) is investigating three of these companies.

They offer plots of land in foreign countries for investment, notably in England and Canada, and promise extremely high rates of return, some as much as over 800 per cent.

SSM raided the offices of the three companies on Oct 24 after months of surveillance and seized "relevant assets including ICT equipment and documents" to assist in its investigations.

"We decided to take action against these companies because of recent developments in Britain.
"One of these three companies' parent company is facing winding-up action by the British authorities," said SSM deputy chief executive Rokiah Md Noor.

"We are concerned about the interests of their investors here, as well as investors who have put money into similar companies offering land banking schemes."

[aticle continues]; November 24, 2008 3:03 PM
Anonymous said...: Indian investors cheated out of land in England that never was"

For those who took UKLI’s promise at face value, the dream of owning a piece of English property is turning into a nightmare

Like the 54-year-old widowed mother of two who invested Rs26 lakh, her life’s savings, to buy two plots after she saw newspaper advertisements in March 2007 promising high returns on land purchases in the UK. The ads were released by UKLI Real Estate Pvt. Ltd, the Indian branch of the UK-based land banking company.
Property scams are not uncommon in India, where cases of unscrupulous developers running away with money collected from homebuyers are a frequent occurrence. But this is probably the first time such a case involving property purchases abroad by domestic buyers has surfaced.

In the UK, large land banking companies such as Land Heritage (UK) Ltd and United Land Holdings went bust in 2006. These companies had also sold farm land to investors by telling them that the plots will gain permission for housing some time in the future.

“More than the need to own a home, it is greed and the desire to see their money grow which makes people invest in such schemes,” Sandeep Singh, director, capital markets, Cushman and Wakefield, a real estate consultant said. “This kind of thing could have happened even within India. People should do a due diligence and use common sense before investing money in these schemes.”

Investors will, not get a refund of their entire investment. “Investors will get a lot less than what they invested...probably 2-3 pence to £1 invested,” Porter said. “We are still working out the refund scheme.”

Few investors from India have got in touch with Deloitte, said Porter. “The records of UKLI are not accurate...some of the addresses of investors are not updated though we have got most of them.”

Complete article (4 pages) at link above; December 16, 2008 6:50 PM
Hounds Low said...: http://www.hounslowchronicle.co.uk/west-london-news/local-hounslow-news/2009/08/13/is-concorde-village-a-real-opportunity-109642-24443896/

Is 'concorde village' a real opportunity?

Aug 13 2009

It is a story that links a former feltham [UK] gravel pit with investors in Brunei, Singapore and Canada and an audacious bid to buy Newcastle United. Ed Saunt investigates what is going on at lower Feltham Lakes.

TO A Far Eastern investor 'Concorde Village' might sound like the perfect business opportunity. Backers could pick up a plot just two miles from Heathrow for just £8,000 with the promise of a 250 per cent return within three years.

Singapore-based landowners Profitable Group said the Lower Feltham Lakes site was ripe for a housing project comprising 1,000 homes and a recent entry on its website boasts that development proposals have already been submitted.

However, following an investigation by the Chronicle into concerns from investors and neighbours of the site, Hounslow Council has confirmed no such application has been received, while Profitable's UK communications consultants, Chelgate, admitted this week that the claims were untrue.

Mike Hardware, executive vice-president of Chelgate, said: "We know that's not true. I don't know why that's there because the council has not received an application and we are not intending to submit one in the near future."

Chelgate is leading a consultation into proposed development of the former Feltham gravel pits off Chertsey Road but Mr Hardware admitted it would be at least four years before a planning application is even lodged with Hounslow Council.

Profitable Group - which last month put in a bid to buy Newcastle United - bought the land from housebuilder Taylor Wimpey for £3.15m in 2006 but the group's predictions of 250 per cent growth for investors would value the land at more than £100m.

The council has been inundated with queries from investors who fear they might not see any return on their money.

A man from Brunei wrote: "They (Profitable Group) have been marketing very heavily here and have been trying to persuade my family to buy some plots on their scheme. Have you any news regarding them? I fear they may be one of the many scams that are mushrooming around the world. With their marketing and information it is hard to believe that such ventures can be so profitable."

Another potential investor from Singapore, on the verge of buying 47 plots for £253,125, said he was told planning permission was likely to be granted in 2010 or 2011.

Feltham residents have also contacted the council to seek reassurance that deals had not been made with developers behind closed doors.

A spokeswoman for Hounslow Council said: "The site does not have planning permission. We have been in contact with the planning consultants to reiterate that any proposal for redevelopment of this site for residential or mixed used purposes, under current policy, would not be supported by the Council. We have asked that this is relayed to any marketing company that the landowners may be using."

Profitable's UK planning consultant, Neil Osborn said: "This is absolutely not a scam. It's a strategic potential development site. The Profitable Group are a Singapore Quality Class company, which is an award that only goes to a handful of companies that meet the very highest standards of conduct."; August 27, 2009 8:59 PM
Anonymous said...: Good one! Thanks for info.
UK property value; October 12, 2010 2:58 PM

Tuesday, October 28, 2008

Malaysia act against land banking

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