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18.124. Land Policy risk

Land is the basis of all real estate investment. Changes of land management system and land regulation, different land acquirement way (bid, public auction, sale under agreement) will have immense influence on real estate investment. For example, to avoid the land price deviate too widely from normal the market price, government will implement tight land regulation policies, which might bring unpredicted loss on the real estate investor. The land regulation policies such as the government will sell the land at high price to limit the land supply, obviously this will increase the cost of the real estate investment. On the contrary, when the market was permeated by speculation phenomenon, the government will increase the cost of the real estate investment. On the contrary, when the market was permeated by speculation phenomenon, the government will increase the supply of cheap land to caution against the speculation activities in the market. Consequently, it will bring high risks to the real estate investors who stock up the land at an earlier period.