The development industry has warned property investors and home buyers to be wary of purchasing "options" in proposed future housing estates.
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.