HOW DOES LAND BANKING WORK?
Land Banking is simply the process of securing future property development sites today, at the current price.
Many large property development companies buy Greenfield sites, farms or large tracts of land and put them in their “land bank” to ensure they have a sufficient stock of land for future property developments.
Over time they rezone the land, put in the necessary roads and infrastructure, undertake a subdivision
and on-sell the individual lots.
While holding a bank or stockpile of land has helped many developers make big profits in a rising market, it has also been the downfall of a number prominent developers when real estate values slumped, or rising interest rates blew out holding costs.
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