The Ethics of Land Banking: Strategic Investment or Hoarding Development?

ESV Inyang, Michael Ekpenyong

Land banking the practice of acquiring large parcels of land for future development or speculative profit has become a common strategy among developers and investors in Nigeria and other growing economies. On one hand, it is hailed as a legitimate investment approach that allows for strategic urban planning and long-term wealth creation. On the other, critics argue that it contributes to housing shortages, inflates property prices, and hoards land that could otherwise serve communities in need. The ethical debate around land banking lies at the intersection of profit, public interest, and sustainable development.

Proponents of land banking highlight its role in strategic investment and urban planning. By acquiring land in anticipation of infrastructure development or rising demand, investors can coordinate projects efficiently, ensuring that residential, commercial, or industrial developments align with market trends. When done responsibly, land banking can help developers plan comprehensive estates, allocate green spaces, and create amenities in a way that piecemeal acquisitions often cannot achieve. From this perspective, holding land is not mere speculation but a forward-looking strategy that supports organised growth.

However, ethical concerns arise when land banking delays or blocks access to much-needed housing. In cities with chronic housing deficits, large tracts of undeveloped land held by private investors exacerbate shortages and push property prices beyond the reach of ordinary citizens. The practice becomes particularly contentious when land is purchased not for eventual development but purely to benefit from rising market values. Such hoarding restricts the supply of affordable housing, widens inequality, and undermines social responsibility in urban development.

Land banking also raises questions about community impact and transparency. Often, investors acquire land without engaging local communities, disregarding the social and economic needs of residents. In some cases, lands intended for public use such as schools, parks, or infrastructure are tied up in speculative holdings, delaying urban projects that could improve quality of life. Ethically, this creates tension between private profit motives and public welfare.

Regulatory frameworks can influence whether land banking serves strategic or harmful purposes. Strong land-use policies, property tax systems that discourage prolonged underdevelopment, and incentives for timely development can align investor behavior with societal needs. Conversely, weak regulation allows unchecked speculation, enabling investors to sit on valuable land for years without contributing to housing supply or urban growth.

The debate ultimately hinges on intent, transparency, and social responsibility. Land banking becomes ethically questionable when it prioritises private gain at the expense of communal welfare. It is ethical and socially beneficial when it is part of a well-planned development strategy that balances profitability with the needs of residents and the city as a whole.

In conclusion, land banking is neither inherently unethical nor automatically beneficial. It is a tool whose impact depends on how it is wielded. To ensure that land banking supports sustainable urban growth rather than perpetuating inequality, developers, policymakers, and communities must work together to create transparent, responsible practices that balance strategic investment with the pressing demand for accessible and affordable housing.