Today's investors are faced by a myriad of investment solutions, ranging from unit trusts, stocks and bonds to real estate. But, there is one product that despite its relatively low profile has nonetheless maintained a solid presence.
Ownership of pre-development land has long been the exclusive realm of institutional real estate investors or developers. However, over the past 30 years, Walton International Group, a Calgary-based pre-development land investing company, has made these opportunities available to general investors worldwide.
Walton's pre-development land investment strategy is built around the concept that a piece of land experiences the most significant value increase between its undeveloped phase and the point at which it is bought for development.
The firm acquires "land in the path of growth", so that when demand for that plot of land increases, it can be sold at a higher value and investors are able to harvest the difference, explains Gary Tom, managing director, Walton International Group (Hong Kong).
Although awareness of pre-development land investment is still fairly limited, it is not a novel idea and has co-existed with real estate investment for a fairly long time.
"This is a wise choice for clients who seek stable and proven returns in a business model that has been around as long as real estate," says Mr Tom, adding that it is particularly attractive to people who want low risk and volatility but medium- to long-term investment horizons.
The key feature of pre-development land investment is the ownership of a titled parcel of land — a hard, tangible asset. In a world fraught with complicated investment products, it is not hard to imagine why investors would allocate part of their portfolios for such a diversification.
With more than 1,000 employees worldwide, Walton has a history of successful land investments in North America. The company and its clients own approximately 50,000 acres of land, including 36,000 acres in the US.
The company is currently focusing on the "growth states" of Arizona, Texas and Georgia, with a multi-faceted rationale behind its land investment decisions, including factors such as population growth, economic prospects, housing demand, employment and infrastructure.
A successful business model is carried out in four phases, by four different teams.
The land research and acquisition team locates qualified land and performs extensive due diligence, after which the syndication team packages the land into "saleable products" to be offered to investors.
The land planning team, in turn, is responsible for preparing the land for future development through conceptual planning and land entitlement. Last but not least, the exit strategy team seeks and reviews offers for the land.
Walton's practice of extensive and detailed due diligence has paid off. Professional audit figures show that it has provided an average of 15.43 per cent compounded annual returns for its clients. The average holding period of Walton investments has been nearly seven years, but this decreased to less than five years over the last 10 exited projects, Mr Tom points out.
Walton's Hong Kong office has been in operation for 19 years and focuses mainly on raising funds from local investors for North American land.
"In 2000, the burst of the information technology industry bubble gave us a tremendous opportunity to introduce our product to investors looking for alternative investment solutions. We see exactly the same opportunity in Hong Kong today," he notes.
Walton Hong Kong is looking to recruit qualified sales people and account managers with the core values of integrity and professionalism.
"Candidates must be able to clearly communicate Walton's business model and product features to our clients," says Mr Tom.
Since pre-development land is a lesser-known form of investment in Hong Kong, Walton professionals must be eloquent enough to educate clients and proactive enough to seek out new business. Fluency in English, Mandarin and Cantonese are definite advantages.
Mr Tom stresses that Walton offers an exciting and challenging working environment, and that staff have the opportunity to represent a product with a solid track record, but relatively unknown in the market.
While remuneration for the available positions is commission-based, Walton will provide candidates with an initial training salary of HK$20,000 for the first three months. In addition to full benefits, there is also a bonus for reaching sales targets. "Working with Walton is more than a career — it is a lifestyle," concludes Mr Tom.