Land Banking
Last reviewed 13 June 2026 by Nick Lim, finance broker (FBAA).
Land Banking is buying and holding undeveloped or under-utilised land as an investment, with the aim of developing or reselling it later once its value rises or a development approval is obtained. Because raw land produces no income, mainstream lenders are cautious, so holding costs are often funded through private lending or a caveat loan rather than a standard property loan. A clear exit strategy, such as sale or development, is central to getting funding.
Why Land Banking Matters
Land banking ties up capital in an asset that earns nothing while you hold it, so the funding and exit matter most.
- Buying land to hold for future value or development
- Produces no income while held, so it is harder to fund
- Often carried with private lending or a caveat loan
- Value can lift with rezoning or a development approval
- Needs a clear exit strategy to attract funding
Common Features of Land Banking
- Undeveloped or under-utilised land
- Held for capital growth, not income
- Holding costs include rates, interest and land tax
- Value sensitive to zoning and planning changes
- Exit by sale, site acquisition partner or development
Official reference: business.gov.au
What is land banking?
Buying and holding undeveloped land as an investment to develop or resell later, often after a development approval.
How is land banking financed?
Usually through private lending or a caveat loan, since raw land earns no income and banks are cautious.
Why is land banking risky?
Holding costs run while the land earns nothing, and value depends on zoning and market timing.
Does a development approval increase land value?
Often yes, a development approval can lift value by confirming what can be built.
What exit do lenders want for land banking?
A clear exit strategy, such as sale or development, that repays the loan.