Land banking is not a Ponzi scheme

Someone posted a comment in my blog that a certain land banking scheme was a Ponzi scheme. This is not correct.

In a land banking scheme, the investors bought a plot of land at a certain price. They were usually told that if the land was rezoned, the value would go up two or three times. If the rezoning does not materialise, the investors have to hold the plot for many years or find another investor to take over the plot.

This becomes a Ponzi scheme only if the promoters use the funds from the later sales to pay off the earlier investors with a profit, creating the false impression that the land banking scheme was a profitable investment.

If there is no evidence that this was the practice, it would be wrong to call the land banking a Ponzi scheme.