Based On Real Options Real Estate Development Decision Delayed

Real estate is an important part of the national economy and a barometer of the economy. Its has a direct role in healthy operation of China's economy. The sound development of the real estate industry is essential to our economic development. Since 1998, China's real estate industry has developed rapidly, but there have been many problems. The state has issued a number of land policies in order to solve these problems. Promulgation of a policy will have a large impact on development project investment decisions for real estate developers. Therefore, we need to look for scientific, reasonable and effective way to make decisions on real estate development project.Real option is a kind of financial derivatives, which is gradually widely used in investment decision-making, financial management and valuation area since the late eighties in the twentieth century. Its potential value lies in its ability to capture the flexibility and analyze real-world investment decisions through data. More importantly, the real option is a new way of thinking. It is the real assets under uncertainty option. There are many features of real estate development project.Real estate development project has a large investment scale and a long development cycle. It is affected deeply by the policy. Moreover, it has characteristics of real options , such as, uncertainty, irreversibility and flexibility. So real options to make investment decisions into real estate becomes inevitable .In this article, the issue of real option in deferred real estate development is studied from the current situation of China real estate industry with reference to foreign and domestic research achievement. A decision model of Real Estate deferred development option is established based on the study of concept and influencing factors of real estate development decision-making and the concept, features and types of real options and financial options, as well as deferred real estate development options are studied. The model is also based on the analysis and study of Binomial Model of real option. Also, the calculation of deferred option value is given and the timing of investment is determine through the calculation of the leverage price, and combined with case analysis, the effectiveness of the model is verified.