Study Of The Option Assessment Of The Real Estate Investment Project

Along with the unceasing development of our country' s real estate market, the real estate investment project assessment, an important and profitable work of promoting the market development, attracts much more attention of investors. During the process of assessment of the real estate investment project, the traditional NPV law becomes defective and is hard to surmount. But the application of the real option in assessment can result in more comprehensive, effective and scientific project evaluation. This paper is divided into 5 sections. The first section introduces briefly the development of real estate and the structure of this thesis. The second section studies the characteristics of the real estate investment different from other projects, the defects of the NPV law and gives an introduction of the real option. The third section introduces and analyzes the concepts and kinds of the real option and then theoretically compares it with NPV law. The fourth section lays stress on the assessment model of binary treeand Black--Scholes estates model and compares them. And the fifth sectionstudies the application of real option and points out that it can overcome the defects of NPV law and reflect the inner feature of real estate investment. Therefore, in real estate investment assessment project, real option is a kind of more ideal method than NPV law.