Land investment firm Walton International has set its sights on what it believes is growing demand in Asia for its products.
It has embarked on an exercise to improve its branding, with the industry’s image tainted by news of scams.
It hired a public relations firm for Singapore last month and is looking to do the same for other markets.
The company buys up large areas of land and divides them up into smaller and more affordable plots for retail investors.
The aim is for these plots to be sold collectively when urban redevelopment plans push up the demand for the site and make it more valuable.
Lusi Lim, Walton International’s chief operating officer for Singapore, said: “Normally for investors who come into this, they always have their own financial objective. The way our purchase price is structured is about US$10,000 a unit, and depends on individual objectives, some actually can buy more than one unit.
“We have an anticipated time frame which we do not guarantee, but we have never had any investors who lost their money when they have held to maturity.”
Walton is pitching its products as an alternative investment for portfolio diversification.
According to its accounts, its investments have averaged returns of about 28 per cent a year, and require a holding period of about 7 years on average.
The longest-ever-held project was 19 years, and the shortest one was just over two years.
Walton typically launches about two projects a month, and said sales year to date of over US$78 million has already beaten last year’s of more than US$70 million.
Experts said the unguaranteed investment timeframe is just one issue to consider.
Donald Han, vice chairman of Cushman & Wakefield, said: “Sometimes, the planning approval is not as simplistic, it takes years to get approval, so the holding power must be fairly strong. One must also be able to do their own due diligence. And due diligence cannot be done over phone calls, over the net; you need to be on site, because technically you are buying real estate.
“You need to see what you are buying, and to know what the neighbourhood is about as well. If you can basically stomach the downside risks, then you will be able to look into some form of gains in some point of time, but again there is no guarantee in the real estate market.”
Such checks include verifying the zoning potential of the site and the claims of the company.
Observers said it is also important to check the track record of such investment firms as many scams have sprung up in recent years.
In October 2009, according to the Mirror newspaper, Britannia Land Management – which operated in the UK – was shut down, after being put into compulsory liquidation by courts following fraud investigations.
In August 2009, a director of land banking firm, Land Banking (UK), was found guilty by British regulators of conning investors out of US$5.6 million. He was disqualified from being a director for seven years.
Source : Channel NewsAsia – 24 Nov 2010