Land banking is described as the practice of taking giant parcels of undeveloped land and holding it until the time is right for future development. Traditional land banking involves keeping a patch of virgin land as close to the development path as possible and waiting a few years.

However, investing in land requires a lot of patience and backers can wait indefinitely.

However, land investments can be a great alternative investment strategy given the right location, the right experience, and the holding power.

In Malaysia, an article on banking investments in land appeared in the fiscal magazine “Personal Money” published by The Edge in April 2004 and this signifies the growing awareness of a new type of land-friendly banking corporations. These corporations buy large parcels of land in the development path and syndicate them to sponsors who will then own a full interest in the land. One hundred acres of land, for example, can be divided into smaller units of 0.5 acres each, making it affordable for shareholders to purchase a single investment unit.

Their services include submitting idea plans to the authorities to obtain the correct planning authorization and submitting offers from developers who are interested in getting their parcel of land to all joint shareholders.

Investors make their profits by selling their land to the developer at an appreciated cost. Land that has obtained planning approvals will fetch a premium price from developers. Many Malaysian speculators have made money from these programs and the number of speculators is continuously increasing.