Land banking is a common practice where pre-developed land is bought and held to be sold in the future in order to make a higher return. Purchased land is said to be banked until there is a substantial increase in value, as the demand for land increases or population increases. There are several things that determine the value of land banking. Some of the determinants include the following:
-Adequate water supply
The value of land will tend to be high if there is enough water. This is an indicator that the land has possible chances of appreciation in the near future. When the land appreciates, you will be in a position to sell it at a profit.
-Presence of residential and commercial development
This is an indication that in the near future more development will take place and businesses will expand. The land banking of such land will be high and you will be in a position to sell such the land in future at a higher price than you bought it.
-Presence of growing industries
The presence of growing industries is another important determinant of land banking value. You can buy such land at the current market value in hope that the price will increase in the future, since the presence of industries is an indication of development.
-Studies indicate a healthy growth in population
The land banking value will also be high as compared to other types of land where the population is decreasing. Holding such land will give you more profits when the land is sold in future since the demand will be high.
This is another determinant of land banking value. The value of acquiring such land may be high since it proves to be reachable by car, air or rail. After some time, many development projects will have taken place and the value of land will appreciate. When selling the land in the future, you will be in a position to make more profits after holding such land for some time.
There are several benefits that you will get from land banking. This is because holding the land for a short or long period of time gives opportunity for development to take place and this increases the value of land in future. When selling the land after holding it for a specified period of time, you will be in a position to sell it at a very high price and you will get more profits. It has proven to be a great investment all over the world.