Close to 200 investors lost an estimated $6 million in total.
They had purchased plots of land from $15,000 through Singapore company Land International (Far East) after promises of "high returns with regular payouts for three years". A retired Singapore permanent resident lost $120,000!
Following an insolvency probe, the parent company, Land International, was shut down by the British government in 2008.
Please note that, land plots continued to be sold to investors here through Land International (Far East)!
The issues highlighted:
- Investors were told that the company would seek planning permission to develop these land though the land plots have been zoned as "greenbelt" or protected land on which no development is allowed.
- Promised payouts to investors stopped late last year.
- Investors are unlikely to get their money back as they had been issued title deeds for their plots.
- Differing claims: Director of Land International (Far East) suggested investors appoint their own consultant to get planning permission, an investor claims they had been told upon signing up that a planning consultant would be hired on their behalf.
- Directors of parent company distanced themselves from the Singapore business
Lessons to learn on Land Banking
Mr Seah Seng Choon's (Executive Director of Consumers Association of Singapore) advice on Land Banking
- It's a high-risk investment
- Due diligence - Information on the land being offered such as the condition of the land, its leasehold and restrictions on its use
Investors here will not be protected by the law for this kind of investment.
"Land-banking investments involve investors acquiring direct interests in real estate rather than in securities related to real estate and, as such, fall outside the scope of the Securities & Futures Act (SFA) and Financial Advisers Act (FAA)"
- spokesman for the Monetary Authority of Singapore