A Study On Decision Of Commercial Real Estate Based On Real Options

There are many uncertainties in the process of commercial real estate development. How to make the decision under uncertainty is the matter that developers care about. Traditional investment decision methods cannot properly deal with the uncertainty, irreversibility and flexibility of commercial real estate investment, and thus lead to error decisions. Real option approach, which is such a method that can help investor to make the decision under uncertainty, has been applied to the research about real estate development decision-making abroad and has become the foreland about real estate investment theory study. This paper based on the researches before, combining with the character of commercial real estate development , studies the commercial real estate development decision-making in-depth.In this paper, the author firstly summarizes traditional project investment decision methods, and points out their limitations and shortcomings, and then systematically introduces the newest development of modern investment decision-making theory. Secondly, the author analyzes the real option characteristics of commercial real estate development decision-making, and researches the procedure and characteristics of the commercial real estate development. The author thinks that the main factor of influencing the investment decision of commercial real estate has irreversibility, uncertainty of the external environment condition and flexibility of decision. And the developer should analyze the projects investment in a framework, which includes above three facts in order to obtain the optimal investment decisions. The investment of commercial real estate development has real option characteristics, because the real option method can properly deal with uncertainty, irreversibility and flexibility. In this part, the author construct a framework for analyzing the real options of commercial real estate investment decision, and analyzes the real options of commercial real estate investment decision from confirming the problem solved, analyzing the uncertain source, distinguishing the key uncertain factor, discerning the type of real options, constructing the real options option model, calculating the value of the commercial real estate, checking the result of calculation and redesigning, finds that the commercial real estate development has postpone option, expansion option, shrink option, change option, give up option. It proves that the commercial real estate has management flexibility in the development item, and the flexibility give...