So upon arrival we were greeted by a client and relationship manager or a salesperson who would explain about how the concept of land investment works. We were also given free food (breakfast and lunch) and RM 100 Parkson vouchers but it's just sort of a gimmick to get you interested. There's also some idle talk before that to get things, and to be honest, they're really smooth talkers. Here's how the concept works:
- The company purchases a plot of greenbelt land. This is land that cannot be developed unless it is rezoned (a process known as getting planning permission) by the government.
- The land is sub-divided into many smaller plots and sold to investors.
- The company retains 25% of the land so that it is also “vested” along with the investors.
- The company goes out to apply for planning permission. This process will take many years. As such, this is more of a long term investment. We were told this would take five to ten years at the minimum.
- Once planning permission is obtained, the value of the land will rise 5-10 times (from your purchase price) and you can realise your gains when the entire site is sold. In Jardin Smith International’s case, 60% of the owners will have to agree before it can be sold through a voting after the land has been rezoned and after 15 years. But the land must be sold no matter what when it hits the 20 year mark.
- UK has a housing problem and land will only become lesser and lesser. And if I'm not wrong the Government needs to build about 30 million homes by the year 2026.
- The price of land has been increasing steadily (About 20-fold in the last 15 years).
- 2012 Summer Olympics will be held in London and this will have positive effect on the property market.
The plot on offer by Jardin was being sold for about RM 67000. An initial deposit of 10% was required and could be paid by credit card. The balance could be paid by credit card and UOB cardholders could even pay by interest-free 12 months installment plans.
In the end we decided that we're not going to invest for some reasons. But I did get to learn something, which is a good thing. No pictures for this event though. And this will be my last post till I'm back from Penang. Good luck to all SPM candidates also!!! =)
3 comments:
Hey, good work Adrian!
Keep up your nice blog :)
To be clear I regard most UK land banking schemes as a scam so i am very biased ( I am from the UK). Here are some issues not identified in your post:-
1: The most likely outcome (99%+) is that this land will not gain planning permission. This is Green Belt land in an administrative area called South Bucks.The last 20 years included one of the biggest UK housing booms ever. Zero Greenbelt land was released by South Bucks for house building. Yes that is Zero. 87% of the area is greeen belt but the council has stated they will not need to release any green belt before 2026 . That shows how much greenbelt there is and how much building land there is in the other 13%.
2: What is the open market value of the land in the event that no planning permission is obtained? In the case of Profitable plots they were selling green belt land parcels with a UK open market value of 1500 RM for 40,000 RM claiming they could achieve 120,000RM if planning permission were achieved. Without planning permission and with Profitable Group in the process of closing down the land plots are probably worth 1500 RM minus legal and administrative costs for selling. Basically worth nothing.
3: What if Jardin Smith fails or closes down (most land banking companies do that within 5-10 years) - how will any sale or planning be achieved ?
4: The UK does not need 30M houses between now and 2026. That is either a mistake by you or a lie by them. In any event as stated above South Bucks have already said that they can meet all of their housing needs between now and 2026 from available land without touching the green belt.
5: Lets say they do need green belt. Why will they need to come to asia to buy it in small plots from greedy investors when they can work with a local landowner and voter for less ? 87% of the land is greenbelt. There is a lot of it if they decided to relax the regulations.
6: Search for Jardin Smith Gerrards Cross in Google and you will find all you need to know.
This is very a high risk investment which is not regulated by MAS or any other authority in Singapore. Think very carefully before investing. You may lose all of your money.
If you do a search for "jardin smith" using the google advanced search feature for the last month you will find nothing but entries for job sites. Does Jardin Smith really have so many jobs ? Because of their abysmal performance in returns on investments and return of capital land banking companies are now very restricted in the media outlets they can use. Most reputable newspapers and TV will not touch them. So a strategy is to run adverts for non existent jobs in job sites and farm the responses for contacts. These people are then invited to the next seminar.
Post a Comment