Most people think that land investment is only for real estate developers, who buy big parcels of land for commercial, or residential development. But actually, investing in land is one of the sound investment strategies available for common investor, both large and small.

Why Invest in Land?

  • possibly higher profits
  • less risk – imagine your land got hit by a bomb, it is still a land anyway.
  • greater flexibility for maximizing value – you can plan your dream project on it.
  • easier and simpler investment management
  • land is real – it is tangible, can be visited, seen and walked on
  • land is a finite resource
  • land increases in value due to demand outstripping supply.

Land changes in value simply due to the whim of mankind. When the local authority suddenly approve a new project on an abandoned land, it could becomes worth over 10 times! What other investment could possibly achieve high return at no extra cost to you at no risk?

There is a simple piece of advice I got from my uncle in Johor. He invested heavily in palm oil estate. He hinted me that when human population is getting bigger, and global warming increases the sea level, the remaining land will become less and less on earth over time. Buying a land as a long term investment is definitely worth it. This is a direct logic which is very true.

Land Valuation

Compared to houses and commercial buildings, land is much trickier to value because its values varies greatly by what it can be used for. Historically, there is a formula which is that of the houses selling price, 1/3 was the land cost, 1/3 was the building cost, and another 1/3 was the cost of marketing, overheads and also profits.

Recently, with house prices spiraling upwards, plus the competition amongst developers, the profit margins have been reduced from time to time. You will most likely find the formula had changed. For example:

Buy a land, must remember these:

  • always buy freehold unencumbered land (free of mortgages, caveats or charges).
  • always get the land registered in your name with the government land registry office
  • get 100% ownership of the plot and full legal ownership, with the ability to sell it at any time to whomever you want and at any time or price you desire.
  • settle for nothing less, any doubts of fancy clauses just walk away from it.

[poll=7]

Have you invested in a piece of land before? What do you think about land investment? I would like to hear your opinion about it.

Resources and References for land investment in Malaysia
Terms and Conditions of Industrial sites in the State of Penang– quit rent rate and land approved for industrial development

Labuan to invest RM400 million to reclaim land – land is never enough. That is the reason why Japan invaded other nation during World War II

Foreign Investment Guide in Malaysia – Restriction for foreigner who wants to invest in Malaysian properties

Overview of Oil Palm Plantation Development in Sarawak – Look at the prospect of investing in oil palm plantation in Sarawak states.

Malaysia Real Estate Investment Forum – Discussion and arguments about real estate investment in Malaysia. It is a forum with active participants. Ask your real estate question over there and you will likely get a satisfactory answer.

Proposed Acquisition of An Agricultural Land by Asiatic Development Berhad. – Read the proposal by Asiatic to invest in agricultural land.

Listing of Agriculture land for sale in Malaysia – easy browsing of listed agricultural land for sale.

Ninth Malaysia Plan To Strengthen Agriculture And Agro-based Industry – Malaysian government is supporting development in agriculture industry. Read the details.

My other investment related articles:
Flipping Real Estate: Buy at New Property Launch
Leverage in Investment

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KCLau
KCLau

Personal finance author and trainer

    12 replies to "Why Invest in Land?"

    • Cheng Pek Gan

      Thank you for your informative guide on land investment.
      I’ve a few questions in mind and hoping for your advices.
      I’m planning to buy a piece of land which is ranging 6000-8000sqft in order to built own house. Lucky for me, I’ve spotted a land lot with the desired size and location. However, that land is an agricultural land, freehold with individual title. The owners of neighbouring lots of land heve already built their own houses.
      Questions: What are the differences between agriculture and residential lands?
      Can I pay a lower rate for agriculture land lot?
      How is the resale value of agricultural land?

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    • […] Why Invest in Land? saying, “Most people think that land investment is only for real estate developers, who buy big parcels of land for commercial, or residential development. But actually, investing in land is one of the sound investment strategies available for common investor, both large and small.” […]

    • […] presents Why Invest in Land? posted at KCLau’s Money Tips. Most people think that land investment is only for real estate […]

    • […] presents Why Invest in Land? posted at KCLau’s Money […]

    • […] presents Why Invest in Land? posted at KCLau’s Money Tips, saying, “Most people think that land investment is only […]

    • […] presents Why Invest in Land? posted at KCLau’s Money Tips. Most people think that land investment is only for real estate […]

    • […] presents Why Invest in Land? posted at KCLau’s Money Tips. Most people think that land investment is only for real estate […]

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