Long-term property investors with a time horizon of five to ten years or more should always be asking themselves the same pointed question: what property is undeniably cheap right now?
You see, when you buy cheap-high-yielding quality assets you don’t just immediately have more upside potential locked in. You also have an in built safety margin buffer as well.
The problem many property investors are facing right now is this: finding properties which are underpriced in a roaring ‘bull market’.
There’s no doubt it’s often tough to find micro markets that are inexpensive.
So what opportunities are there moving forward?
A Newfound Bounty
It pays to develop a shopping list of strategies to focus on during market ‘booms’.
With that in mind, the recent proposals by the Royal Institution of Chartered Surveyors (RICS) should be of great interest to contrarian investors.
They have recently suggested that a new ‘amberfield’ status should be given to certain areas of land to speed up the delivery of additional housing.
This new land classification proposal by RICS aims to shake up the cumbersome planning system which blocks and slows down development on Brownfield and Greenfield sites.
Wider benefits
The proposed benefits would include:
- Increased confidence among savvy-contrarian property investors
- Development of local infrastructure projects
- Ability to overcome the chronic shortage of current housing
What It Means for Investors
The implications of the ‘amberfield’ label would be:
- Development opportunities for savvy investors to build to let or build to sell
- New development driving up the values of neighbouring properties where investors already hold a property portfolio
- New infrastructure such as highways, amended and improved public transport and new retail shops, all of which can increase the attractiveness of an area meaning more tenant demand, less voids and more cashflow!
You see, buying land to develop is a little known, and closely guarded secret that the “big boys” of property and the super-rich like The Candy Brothers, our friend Andreas Panayiotou & many of the Rich List have used to make them £millions of pounds.
But yet, very few investors are even aware of this strategy even exists, and even fewer are actually doing it..
It’s so simple and lucrative, but most people have never heard of it!
It may even surprise you that this strategy has been around for decades?
Perhaps because the domain has usually been reserved for the ultra wealthy property professionals and large developers…
But here’s the cool thing..
- This strategy is recession and ‘stock market proof’
- Land is a hot commodity & is becoming increasingly popular as it’s a tangible asset
- It’s more secure than off-plan property
- There is a price manipulation but its 100% legal
- You can structure these deals via legal contracts which virtually eliminates all of your downside…
The idea being spotting undeveloped land which lies in the path of development and either sell on once its value is realised or develop the land to further capitalise on the area’s growth.
Ways to Profit from Land Banking
Land Value Appreciation: Buying land can be a smart strategy which can prove highly profitable in the long run. Just like property investments mature over time, so does land value in surrounding areas.
Development Gain: You can force the value of the land by gaining planning permission for multiple dwellings, flats and even houses.
This will make the site more attractive to developers who will be more than willing to pay a premium for the lot in the hope of making more profit from the end gross development value. (You can even JV with a builder and build-to-sell making higher margins)
Property Cycle Gain: As the market moves in different cycles, it may not seem lucrative buying land at low price for the short term..
However, as the market moves, the combination of stronger market growth and purchasing in prime locations (where there is no vacant land for development) but increasing demand for new developments will spike up the value of your vacant land making it a perfect recipe for successful land banking.
Population growth Gain: As population, income and wealth grows land values are driven up with a stable economy. More demand for housing can drive up land prices which is why large developers and the rich have been using this strategy for decades.
You see every developer in every town and city knows that as the population grows, buying undeveloped land will make them a tidy profit.
Planning purchases prior to obtaining planning permission makes this a profitable buy and increases the land value drastically.
The short of it is we need more land. If we don’t have land, we can’t build. And that’s the one thing they’re not building more of.
We are surrounded by green belt, viewing corridors, conservation areas and much more…
The fact the current planning system has restricted the release of land available means ‘amberfield’ has come at a time where house builders and investor-developers need it the most.
You might even be thinking…is there risk in this contrarian play? Of course, there’s risk with every potential investment.
But here’s the secret. If you want to own the asset class that’s likely to go up the most, you might start by evaluating the ones that are missed by the most.
