Land banking

Land banking is the practice of acquiring and holding land ahead of its intended development, typically while planning approvals are pursued or while market conditions mature to the point construction becomes viable, rather than building immediately on acquisition. A land bank loan is the facility structured specifically for this holding period, generally interest-capitalised given the site produces no income, and priced and termed around the expected time to reach development approval or a chosen exit point. Lenders financing land banking assess the site's underlying development potential, the credibility of the planning pathway, and — critically — the exit, since a land bank facility that runs past its intended term without approval progressing is a materially different risk than one on track. Land banking suits developers taking a genuinely long-term view of a site or market, and is a distinct strategy, with distinct financing needs, from active development where construction begins promptly after acquisition.

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Land bank loans · Englobo land · Exit strategy