“If only I knew then, what I do now”: A common expression, that is often all to true when it comes to investing in real estate: especially land banking.
I am sure most people would love to have bought as much real estate properties as possible, 5-10 years ago, had they known that investments made would be worth double or even triple today.
Well there’s no better time to buy land and wait than now, as long as it is well located, the likelihood of banking (profiting) is very high. Thus, making it one of the safest ways to store money and increase wealth (better than putting money in the bank!)
What is land banking?
Land banking is the process of acquiring future real estate development sites at today’s prices. Today’s prices are foreseen to be lower than what they will be in the future. Accordingly investors hope to profit by selling their already secured land for greater profits down the line.
Land banking is a real estate investment strategy that has increasingly become popular, particularly in the emerging markets of Africa such as Nigeria.
Agricultural land banking
Agricultural land banking is another form practiced in Nigeria. This is the securing of raw virgin land that has been deemed appropriate for farming. This suitability is based on the land’s topography, soil structure and climate. Often buyers do not intend to farm themselves or lease out to a farmer, rather the land sits in the “bank”.
Agricultural land banks are often purchased at reduced prices as these lands are usually sited far away from cities and the infrastructure that can be found in them. By investing in these agricultural lands’ investors hope that due to the lands ability to produce food, required infrastructure such as roads will develop over time. This allows the land to be farmed more productively hence increasing its value.
Investors may also profit from the expansion of urban areas towards these farmlands, potentially being able to change the zoning from agricultural to either commercial or residential.
Why land banking makes for a good investment
- Over the long run, land values are always going up: this is true globally
- You can decide to make improvements on the land: which will make it more valuable
- Land is relatively abundant and thus cheap: especially in developing countries like Nigeria
- Land is easier to manage than built up properties: no utility fees, no tenant problems etc.
- Land is a safe investment that will always be in demand for one reason or another
Where to land bank in Nigeria
The most important thing you need to consider before buying is the “where”: location, location, location is of the utmost importance.
There is no point buying land where you will find it very difficult to sell in the future, regardless of how cheap it is (unless you are a seasoned investor with a specific strategy in place). Consequently, it is always recommended to buy near developing cities in order to maximize the return on investment in the shortest possible time.
Land banking is a great alternative investment strategy: specifically, for investors that just want to invest, wait and forget.
Land almost always appreciates in value and is relatively cheap to acquire in Nigeria. Lagos is arguably the best place to land bank in the country. Simply buy some plots near a soon to be developed district, wait and bank (profit).
OUR LISTINGS: Aimart Realtors | …Land and Housing services