The Use Of Optimization Theory In Real Estate Investment Decision Making

Real Estate industries have become of the top forms of economical development in nearly every country today . The investment in these industries have long cycles , large risks and high rewards . But if the investments are not healthy , it will become like a bubble . Once the bubble bursts , it will damage a country's economy greatly . Following the re-organization of the world economy and China's entrance to WTO , Real Estate has become a growing field in China's market economy, creating a sudden growth in the number of registered Real Estate companies . So far , China has relativily many problems in these investments . Heavy losses are common due to improper decision making , the yearly rise of companies experiencing bankruptcy , leads up to a high rate of loss of profits . Therefore , careful thinking must be applied to investment decisions of Real Estate investments are based on the fundamental theories of social market economy and investments . The unique characteristics of Real Estate emphasizes on economic analysis and profit estimation of each Real Estate project. The first step is to understand the feasibility analysis and the steps of decision making of an Real Estate project, then to find the optimal decision making process for an investment. Only then, can one receive the best returns .This thesis uses real operation procedures and proposes a two stages , multiple factored , multiple indicational framework for investment decision , thus providing a solution for location, style and scale .There are five chapters total in this article . The first chapter summarizes the decision making of Real Estate . Chapter Two defines the factors affecting Real Estate decision , including environmental factors , economic beneficial factors , which involve 8 major factors and more than 30 minor factors . For this purpose , the Environmental Assessment Indicator system and the Economic Benefit Assessment Indicator System are created . Both systems include environmental factors , social factors , natural surrounding factors and infrastructure factors . However , thirty moreminor factors still persist. The Assessment Indicator System as well as the Dynamic Benefit Indicator eliminates 2 more of these factors . Chapter Three establishes a two-part Real Estate investment decision model . The first step is to use Comprehensive Evaluation Method , then to use the AHP to determine various environmental factor's weight coefficient , to determine the value for the factors through the statistics method , then to calculate the average to find the total sum , finally to obtain an optimal location .The second step is to use An Optimal Model with Entropy Coefficient to optimize style and scale of structures . Specifically , by determining entropy coefficient for different structural styles and establishing a model in which the total return of the investment is the target function, by using economical efficiency factors as an evaluation index . Finally , to obtain an optimal programming area . An example of Chapter Four can be found in the construction of dormitory complexes , they serve as an example that further illustrates the applicability and feasibility of instant method . In Chapter Five , Real Estate investment decisions are treated as a multi-objective decision problem. A fuzzy iteration mathematical modeh a multi-objective programming model and a goal programming model are established for solving the problem . Then their solving methods are given . At the last ,simple objective decision making is compared with multi-objective decision making.