Research On Financial Evaluation Of Real Estate Investment Project

Due to some unique characteristics such as large investments and high risks, it isessential for the real estate investment project (REIP) to do the financial evaluation well.Scientific and reasonable REIP financial evaluation could not only provide faithful referencesto investors, but the related industries could be benefited from the REIP financial evaluationin relation to decision making.However, with appearing of new operating methods of REIP and reformation of financialaccounting standards, the old REIP financial evaluation system cannot keep the pace of allthese developments. Hence, this paper aims to generate a new REIP financial evaluationsystem. To achieve this purpose, this paper also discusses the problems in the old REIPfinancial evaluation system based on the current analysis results in both China and foreigncountries. At last, this paper also tests the new system by using some realistic cases.There are three key differences in the creation of the new REIP financial evaluationsystem, comparing with the previous research. Firstly, five kinds of evaluation methods arefound out based on five different real estate operating ways. All of them consider the newfinancial accounting standards. Secondly, the real option theory is introduced into thecalculating of the financial data. Thirdly, AHP is applied when the final decision is made,which makes the REIP financial evaluation consider more factors.After generating the new REIP financial evaluation system, this paper conducts biot thenew and old REIP financial evaluation systems into practice to compare. The results showthat the new REIP financial evaluation system is more scientific and reasonable.Doing reliable REIP financial evaluation before the project coming into practice could behelpful to reduce the risk of making blind-investment and incorrect decision. The new REIPfinancial evaluation system introduced in this paper could be beneficial for the REIP.