Buyers beware 'options' on paddocks
Urban Development Institute of Australia chief executive Tony De Domenico said consumers should be careful about paying for options or reservation fees on land that ultimately may or may not be developed.
"These are high-risk investment products, not land sales," Mr De Domenico said.
Fairfax Media reported two weeks ago that investors may have paid up to $34 million for "options" in a supposedly idyllic rural housing development that is just a paddock. Options in the development in the residentially zoned growth area of Huntly on the Midland Highway, 12 kilometres from Bendigo's town centre, were sold to investors by the 21st Century Property arm of wealth spruiker Jamie McIntyre.
Mr De Domenico said Urban Development Institute members only sell land that has been appropriately planned, permitted and approved. Buyers should avoid speculating and stick to reputable developments that obtain appropriate permits and approvals before they commence selling, he said.
"Don't take the risk," he said.
Documents published online in March last year by 21st Century Property's Konrad Bobilak, a former associate of failed property salesman Henry Kaye, sell the virtues of "land banking".
Mr Bobilak suggests 21st Century can help investors learn about "lucrative and attractive" option contracts that can be like "winning Lotto" if successful. The material has since been removed from 21st Century's website. Over the past 18 months, 21st Century has offered investors speculative "wholesale land" packages in the proposed Acacia Banks estate on behalf of a property syndicate named Midland Highway Pty Ltd which controls the land.
The "options" give the holder the right, but not obligation, to buy the land or on-sell it to the developer or another buyer at a higher price if and when the estate goes ahead. Mr De Domenico said land developments in Shepparton, Bendigo, Melton, Wyndham and Clyde had been targeted.
sjohanson@fairfaxmedia.com.au
Frequently Asked Questions about this Article…
Options on proposed housing estates are contracts that give the holder the right — but not the obligation — to buy the land or to on-sell it to the developer or another buyer at a higher price if and when the estate goes ahead. They do not guarantee that the land will be developed.
Industry leaders say these are high‑risk investment products, not straightforward land sales. Options and reservation fees can be lost if the estate never proceeds, and investors may be left holding undeveloped paddocks. Fairfax reported investors may have paid up to $34 million for options in one rural development, highlighting the potential scale of losses.
Tony De Domenico, chief executive of the Urban Development Institute of Australia (UDIA), warned consumers to be careful about paying for options or reservation fees on land that may not be developed, saying 'don't take the risk.'
The article names 21st Century Property (linked to sales activity by Konrad Bobilak and Jamie McIntyre), a property syndicate called Midland Highway Pty Ltd, and a proposed Acacia Banks estate. It also references historical connections to property salesman Henry Kaye in relation to an associate.
Marketing materials (since removed from the 21st Century website) promoted 'land banking' and described option contracts as 'lucrative and attractive', even likening success to 'winning Lotto'. Over the past 18 months 21st Century offered speculative 'wholesale land' packages for the proposed Acacia Banks estate.
The article says developments in Shepparton, Bendigo (including a site at Huntly on the Midland Highway about 12 kilometres from Bendigo’s town centre), Melton, Wyndham and Clyde were targeted by these option offers.
UDIA members only sell land that has been appropriately planned, permitted and approved. The UDIA advises buyers to avoid speculating and to stick to reputable developments that have obtained the necessary permits and approvals before they commence selling.
Documents published online in March by Konrad Bobilak of 21st Century Property promoting 'land banking' and option contracts were later removed from the 21st Century website, according to the article.
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