Types Of Land Banking Practice
While there are no generally stipulated rules involves in Land Banking except for countries where there are regulations in form legislative laws to protect investors in land Banking practice as it will also be considered later in this series, there are three possible types of Land Banking practices. These include; (1) Real Estate Land Banking, (2) Agricultural Land Banking And (3) Fractionalized Land Banking.
Real Estate Land Banking
This is a land banking scheme that involves investing in land ownership for a stipulated Period of time with the sole purpose of developing such landed properties as apartment buildings, commercial buildings etc. The risk is that if such landed properties are located at areas that had been marked by the local authorities as a red zone area like areas prone to natural disasters or for infrastructure development by the local authorities.
Such risk can be avoided by ensuring thorough due diligence before banking on such lands.
Agricultural Land Banking
This is a practice of land Acquisition for the purpose of growing crops and animals.
This practice also allows small holder farmers organised into cooperatives in less developed or rural areas to jointly acquire larger portions of lands for large scale commercial farming purposes and such can be gradually expanded to grow in scale as they generate income from the already existing farms.
Fractionalized Land Banking
This is a type of land banking system where the portion of land offered for sales through a land banking scheme is divided into fractions like in Square Metres (Sqm). The essence of this type of practice is to Democratise assets ownership by removing entry level barrier to real assets ownership.
This type of scheme makes it possible for even the large majority in the lowest income class to invest in real estate as against the regular wholesale investment that requires large capital to embark on, of which the the lower class usually do not afford even when they wish they could.
This fractionalized Land banking can even be tokenized as NFTs that serves as security to the asset holder.
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