The value of land rented is mostly based on the rent that can be charged. Loans which use the land as collateral need the value to stay high in order to roll over (refinance) the loan.
It's conceivably better for major real-estate holders to rent the land out at their preferred rate one or two months in a year, and leave it unoccupied otherwise, than accept reduced rates. The former gives a fig leaf for rental value, which props up the land value, which enables refinance. The latter admits that rental value has dropped, which would lower the land value, which would cause refinancing to fail.
That makes sense, but I'm confused how you make loan payments without tenants paying rent. Not to mention property taxes, maintenance, utilities and other overhead.
Kind of feels like the cliché "make it up in volume" when you're losing money on each transaction.
It's not sustainable indefinitely but most large landlords have significant capital reserves as well as revenue from a diverse portfolio of other properties. So they can afford to take losses on vacant properties for a few years while waiting for the market to recover.
You don't make loan payments; you make interest-only payments and are speculating on future appreciation on the value of the land, a proxy for the local economy.
It's not sustainable indefinitely, but it can go on for some time. And if the economy picks up, then all is right again.
You are speculating with other people’s money and at very high leverage. If the market keeps going up the amount of profit can be spectacular and the losses while also potentially spectacular may not be so bad if you don’t have any collateral in the first place.
It's conceivably better for major real-estate holders to rent the land out at their preferred rate one or two months in a year, and leave it unoccupied otherwise, than accept reduced rates. The former gives a fig leaf for rental value, which props up the land value, which enables refinance. The latter admits that rental value has dropped, which would lower the land value, which would cause refinancing to fail.