Land banking is a type of real estate investment. Investors purchase undeveloped land.
They predict urban expansion will increase the land’s value.
Land banking differs from residential development. Land banking involves holding undeveloped land.
Residential development requires constructing homes or apartments.
Three features popular in land banking include purchasing undeveloped land near urban areas, speculating on future zoning changes, and holding land for long periods. Examples include buying outskirts land in Bangkok anticipating future city growth, predicting land near new public transport lines will be rezoned for commercial use, and investors holding land for over a decade to maximize returns.
Three common features in land banking encompass strategic location selection, land acquisition costs, and long-term investment horizon. Strategic location selection involves buying land in paths of future growth, such as near new airports or business districts.
Land acquisition costs are lower for undeveloped land, making early investments more accessible. A long-term investment horizon allows land value to appreciate, benefiting from urban development and inflation.
Unusual features in land banking can include buying land in areas prone to rezoning controversies, investing in land with uncertain titles, and speculating on land based on futuristic urban planning concepts. Investors might target land in Bangkok’s areas debated for historical preservation, purchase land with disputed ownership, and speculate on land designated for future smart cities.
Unique features of land banking highlight purchasing land with natural resource potential, engaging in land swapping deals, and leveraging political changes for zoning advantages. Investors may buy land in Bangkok with untapped underground water reserves, swap land parcels with other investors to consolidate strategic positions, and monitor political shifts that could favor rezoning land for commercial development.
Comparing land banking with real estate development, land banking requires less initial capital since it avoids construction costs. Real estate development typically focuses on immediate returns through building and selling properties, whereas land banking profits from the appreciation of land value over time.
For those interested in further exploring concepts related to land banking and other investment strategies in Bangkok’s real estate market, consider visiting our glossary about Bangkok real estate for more information and definitions.