Study On The Application Of Real Option Approach To Investment Decision-making In Real Estate

As a kind of new thinking approach, real option was gradually applied to such fields as investment decision-making, financial management, and value assessment. In the field of real estate, tradition investment decision-making methods, real estate investment risk management methods and so on can't make better use of uncertainties to create value. While real option approach can change the degree of influence resulting from uncertainties, make investor considerate more selected schemes. It can not only be a technical method which can deal with investment flexibility and variability, but also be valuable means changing tradition investment thinking.Real option is so reasonable and advantageous as a new way of thinking in real estate. This dissertation has discussed the application of real option on the government landed property investment, the development and investment risk management in real estate and real estate item development. The paper is divided into five chapters .At first, introduction, as a high risk and investment ratio industry, the real estate has distinctive investment character, and tradition investment decision-making methods and real estate investment risk management methods have some weakness especially in uncertain world, so real option is necessary to be applied to the field of real estate. And then the paper has introduced the development of real option in real estate at home and abroad, finally the research contents and frame of the paper.In the second chapter, the paper has introduced the basic conception, the characteristic the pricing model of real option, described the distinguish feature and the classification of real estate investment, then systematically expounded the uncertainties in real estate from several angles. At last, the real option characteristics in real estate investment are proved in detail, then the advantage and the range of real option in this field is presented.In the third chapter, the real option central notions is expounded in detail, then the seven kinds of basic real option. And the investment item is classified from new angle for the application of real option. Then the paper has constructed the real option means system in real estate, in order to unite the tradition investment methods with real option.In forth chapter, the paper has proofed the application of real option in real estate from several angles. First, the use of real option in the government landed property investment is expounded from two aspect, one is land option system, the other is design real option, because the government has two function during the process. Second, the real option challenged the tradition risk manage method, so the administrate steps from real option are introduced. At last, making a real estate investment item of Baoding as the example of case, the dissertation has applied the real option method of real estate in the decision procedure of the item.At last, the paper illuminates the main research work, points out some issues that investors in real estate need to pay attention to in the future.