Halal Investment

In recent times, more and more banks came forward to capture a potentially profitable slice of Muslim and ethical investment market. However, financial and investment products that meet the requirements of Shariah law are still comparatively thin on the ground. Traditionally, small savings account or buying a property through Islamic finance is considered as an investment to expect a return. In few instances, buy-to-let is also considered as a good investment.

However, Muslims and ethical investors are missing out of a relatively untapped market- 'Investment in land'.

Buying undeveloped land that can be built on is the new craze - and given the supply and demand equation in relation to the UK's housing needs it is not difficult to see why. Unlike conventional property market, where investors require financing through banks, investments in land do not usually require big chunks of money and do not require to be entangled with a bank or interest.

Buying land for sale in Britain appears attractive during a period when property still seems to be the best and safest investment.

Yet it is all the rage as back gardens fall into the hands of developers and homes start to sprout up in the most unlikely of places. That means there is money to be made from owning land that has building potential and today land speculation is all the rage.

It is simply an accepted fact that there is a huge potential market for such investment. Recent surveys shows that investment land has outperformed stocks and shares for each of the last 5 years and is one of the most popular forms of investment by private individuals.

A recent survey by the Halifax showed that the value of residential land had risen by 808% over the previous twenty years in England and Wales. This figure excluded London. Over the same period, surprisingly, the average house price had risen by only 306% - making this type of land investment - a better opportunity than bricks and mortar.

There is little doubt that a site suitable for residential development would be considered the most prime type of investment land. But unsurprisingly these tend to be the most expensive and are relatively scarce, so investors are now looking at other possibilities for land investment.

A recent report from the Chartered Institute of Surveyors (RICS) noted that farmland investment was partly viewed as an alternative investment to the stock market'.
Nevertheless, the Halifax Survey reminds that land investment, like stocks and shares, could go up and down in value. There was a correlation between land values and house price inflation. "When these has been either positive or negative price growth in the housing market ... this has typically been amplified in the value of building
business consider that less expensive and more abundant end of the scale comes agricultural land. This had been the cheapest point of entry for the potential land investor, but in November 2004 the RICS survey concluded that the land investment buying trend had moved to farmland too. It reported, "Farmland is being targeted by a new breed of investors, fuelling demand and raising land prices".

Comparatively lower prices per acre used to be the norm. Not so any more, the RICs report stated " the average land price of farmland continues to edge close to the £10,000 per hectare, with the price rises rivaling those of the residential sector in the past year".

In fact now many types of land may be worth considering as potential investment land. Although, one might consider investing in firm land, a prudent investor would certainly look for better potential for better return. There are few points to note before deciding which property is best for your investment. There are a number of factors that the investor new to the potential in self-build land needs to know about, even though investment land for sale has been considered by many to have performed well over the past few years and with the current shortage of affordable housing, the value of self-build land development looks set to rise again.

This, coupled with the fact that land is seen as a real investment and that the supply of self-build land cannot be manufactured out of nothing, shows why building plots of land for sale are viewed by many as an attractive investment opportunity.

Even so people buy land for different reasons. Some wish only to care for animals or use their land as a pony paddock; others take a long term investment perspective and hold on to their building plots of land for sale for many years, waiting for the value to appreciate. Many people also use their plot as self-build land to build their own 'dream' home.

Because you are entering the unknown, a land agent can help with the buying process. To the man in the street, or even to those more experienced in financial matters, selfbuild land development is probably a foreign business. Many people are experienced in the purchase of new homes, and there is some overlap between this and the purchase of the land, but there is also a great deal of territory between the two. As with any investment, there is an element of risk with investment land. And, of course it is all about speculation and having an eye on the long game. The government has already said that to cope with the demand for housing in London green belt areas will need to be developed. The figures suggest 40 per cent development of greenfield land and 60 per cent of brownfield sites.

The risk here is that speculative land investment in plots without planning permission in areas of high housing need is done with the longer term view in mind and the hope and belief that planning permission will be granted in years to come. Having gained planning permission the land may then increase in value 10 times over.
So a cool head and a rational approach are vital.

Promoters of land speculation often tell you: "You don't wait to land, you buy land and wait."

To this end there is a lot of activity from land agents particular across South East England. They specialise in land for sale close to existing housing that has been identified as having a good medium to long-term chance of gaining planning permission for residential housing.

Residential-sized plots of land for sale are then offered to the public allowing them to share in possible future development gains and, with the dotcom crash and the recent accounting scandals, the simplicity and transparency of investment building plots for sale has gained many followers.
There are no complicated concepts that investors need to understand with land, just that there is an everincreasing demand for building land for sale and a restricted supply of plots for sale.

The advantages are:
• Land is real.
• Unlike shares land is tangible - it can be visited, seen and walked on.
• There is a limited supply on land.
• England is a small country with the majority of the population wanting to live in the South East.
• It is easy to understand and seen as a solid investment.
• Land is not open to accounting scandals and it is clear when property prices are going up (or down) and the reason for this movement.
• It is a cheap way to invest in property
• Land increases in value in two ways: - By increasing property values (due to demand outstripping supply).
• By gaining permission to have houses built on it.

For example, a £15,000 plot of land in the South East that gains planning permission to build a four bedroomed detached house on it would then be worth in the region of £200,000 to a developer wanting to put a £600,000 house on the land.

It is, therefore, easy to see why land speculation is the new Klondike. The potential returns outstrip any other investment by miles. But like all these ‘too good to be true’ deals you need tp approach business with a cool head.

Source: lawsonfairbank.co.uk