Real Estate Financing New Channels Practice

Real estate industry has historically been closely connected with finance issues, from various aspects, including appraisal, dealing and payment. While with the strict implement of land auction and biding system, the original approach of acquiring construction land by simple bilateral contracts is no longer workable in China; therefore the replacing approach of land acquirement(by means of biding and auction) mainly depends on strong financial support, instead of strong social networks. Further fluctuation within macroeconomic conditions, not matter from monetary policy viewpoint or industrial trend, all pull up and lay countless limitation and prohibition the property building business. It is not surprising that reliability of banking debts is losing its attraction. Consequently, to call for more steady and resourceful funding solutions in real estate development stages, is now the decisive prerequisite for real estate developers.Within this paper, the whole picture of ways of funding the real estate development is established as the fundamental study topic, based on which the paper links ongoing research and empirical cases both abroad and domestic, with suggestion and advices for China's property funding prospect. The main topic of funding approaches is divided into two sub-topics:one is focusing on commercial housing funding while the other is on low-income housing system funding. The low-income housing system, as an indispensible provider of residential housing system, is getting increasing amount of notice. Contrasted to the funding of commercial housing, the low-income housing system (a.k.a. "Affordable Housing") requires for more sophisticated proxy-agent relationship, proprietary relationship and contract designation. This paper parallels empirical cases study and theoretical discussion in both sub-topics. Through detailed cases study and intergroup comparison, summary and suggestion are reached, and feasibility analysis regarding with China's commercial housing and low-income housing are conducted. The expected upcoming challenges will mainly lay on financial and legislation restraint.This paper has six main sections. SectionⅠdeals with objectives of this paper and a review of existing literatures, based on the relevant topics. SectionⅡandⅢdeal with the subtopic of funding devices for commercial housing, in a logical sequence as followed, firstly, theoretical discussion combined with empirical cases in mature markets, secondly, the current status quo in China and prospective challenges. Section ⅣandⅤdeal with the subtopic of funding devices for low-income housing, in the same logical sequence above.Overall, a steady and abundant capital assurance for housing development could be regarded as the upmost significance. Financial and legislation innovation are critical for building an all-round real estate funding system, and worth of continuing discussion. In order to figure out the optimal "Road Map" for the funding house construction in China's Real Estate Market, several financing approaches could be credited with more research efforts, such as the booming REITs market, Bond embedded with purchasing option, etc.