In Search of the Riskless Speculative Investment

The age old addage of investment is "the more risk, the greater the potential return."

On ABC TV's 'Stateline' (NSW) program last week, there was a report on a group of land owners who bought large blocks of land in the backblocks of western Sydney with the hope, sometime in the future, the land would be rezoned for subdivision. When this happened they'd make a significant profit.

Well, things haven't gone to plan, with the government deciding that certain tracks of land in these areas would not be rezoned. Instead, they are marked to be retained as naturally vegetated land under the current zoning conditions. The government would encourage the owners, using some sort of financial incentive, to maintain or restore the land to its native condition.

Not surprisingly, the effected land owners are not happy, and have formed a lobby group to pressure the government to change its decision. Hopefully, the government will resist.

Buying an asset, in this case land, where it's ultimate value is dependant on a government rezoning decision, has to be classed as a risky investment. The unfortunate thing with risky investments is that sometimes you lose out.

These land owners are no different from any other investors who've lost due to unforeseen circumstances.