What does land banking refer to in real estate practice?

Land banking refers to the practice of acquiring and holding onto land for future development or investment purposes. This approach is often utilized by developers, investors, or municipalities to secure land that may be strategically important for future projects, urban growth, or to take advantage of anticipated increases in land value. The essence of land banking lies in the anticipation of future demand, where the owner plans to develop the land as opportunities arise or as market conditions become favorable.

By purchasing land in areas that are expected to see growth or revitalization, investors can position themselves advantageously before prices rise. This can be part of a broader strategy to ensure that they have available assets for upcoming projects that can yield profitable returns.

Other choices focus on different concepts in real estate, such as sale, private ownership, and exchanges, which do not capture the proactive and strategic nature of land banking.