Are Land Bankers Wankers?

In my view, those who cast a disparaging eye on investors who are patiently waiting for the right time to develop and are currently ‘land banking’ the good sites, tend to be the ones who moan and whine about property being a non-productive asset - not delivering any benefits to society.

Of this, I could not disagree more.

Sure land doesn’t make a coffee or provide us with a tangible service, but there are many intangible services and benefits that come with high-quality development of land. 

How can you ignore the jobs and value created through the employment of labour and securing of materials in the actual consenting and construction processes? 

And then over the lifetime of the resulting asset, the uses and benefits obtained, whether it’s housing a family or a business’s operations.

A developer should realise the opportunity when it makes commercial sense to do so.  It defies logic to put him or herself through financial ruin to try to deliver something that would lead to their commercial demise. 

There’s a distinction between a developer timing a development commercially and someone who has no intention for future improvements, who wishes to sit on the land ‘ad infinitum’.  This is not a developer’s mind-set, yet it’s often confused with a ‘landlord’ who has no interest in future improvements.

Why put the project at risk if the conditions aren’t right?  These are conditions that he or she cannot explicitly influence or alter.  I tip my hat to the ones who resist pressure and are patient and make the right decision as to when to act.  

Those who know that it would be better for themselves and their investors and the wider community to wait until the development has a much greater chance of commercial success and quality, to benefit those who put capital at risk but also the community who will stand to benefit from an improved use of the land.

So are ‘land bankers’ wankers? 

We have to assume that these investors and developers are commercially astute.  They understand that assets work in cycles and they know when to time it appropriately so that they are rewarded for putting their capital and resources at risk.

Graeme Fan