MAS has (through the MoneySense program), recently published a consumer warning on land banking investments.
The warning highlights the risk of investing in land banking products. It also reiterates the fact that land banking is not regulated by MAS as it involves a direct interest in real estate and not securities (such as collective investment schemes).
Interestingly, the UK’s FSA has adopted an approach that some of these land banking investments can be considered a collective investment scheme and has determined that such operators would be in breech of the financial regulation regime if they did not obtain authorisation from FSA. They have actually closed down a number of land banking companies since 2007.
They also said that “if you have entered an agreement to participate in a Landbanking collective investment scheme which is run by an unauthorised person, you may have a statutory right to recover your money and compensation for any consequent losses. This is because agreements which an unauthorised person enters into while operating, advising on or arranging for persons to participate in a collective investment scheme cannot necessarily be enforced.”
The warning from MAS must have came as a result of recent publicity in the press about some investors’ bad experience with a particular land banking company in Singapore. For those investors who had invested with a couple of these companies here (some of which had been operating in Singapore from as early as five years ago), this warning might come as “too little, too late”.