China's land resource watchdog has banned developers from acquiring land for construction in installments to reduce potential capital risks.
Developers must pay off all the money to get a license for the use of land, the Ministry of Land and Resources said on its Website yesterday.
Many developers build houses and pay the land use fee with loans after getting the use right for land. After the houses are sold, the developers will use the sales income to pay back loans and invest in more projects.
Analysts said if any problem happens during the process, banks and the government will face bigger risks than developers.
Real estate tycoons' reckless spending on land has impressed the public in recent years.
In August, Shenzhen-listed Suning Universal Co Ltd set a Shanghai land price record when it spent 4.4 billion yuan (US$578.9 million) for a 13,709-square-meter plot in Huangpu District that's slated for commercial and office development.
(Shanghai Daily October 10, 2007)
