The Financing Ways Of Real Estate In China

Since the first institutional innovation of real estate financing in early 1990's, China has now entered a new stage which requires the second institutional innovation characterized by the diversification of financing channels. Since 2003, the real estate industry has been affected by a series of tightening macroeconomic policies, so the traditional financing ways can't satisfy the demand for capital of real estate. Because the real estate financing system in China is not fully developed, how to expand new financing channels and establish the multi-ways of financing becomes the most important issue of real estate development.The finance of China's real estate has some problems such as inadequate financial institutions, the focus of mistaken financing ways and so on. They limit the expansion of financing channels of the real estate. At present, the corporate finance of China's real estate primarily use bank loans, equity financing, debt financing and other means, not only internal finance and external finance are inadequate, but also equity financing and debt financing are extremely imbalanced. The fundamental reason lies in the existence of structural and functional defects. Diversified financing channels for the sustainable development of China's real estate industry is necessary, so we should take measures from two aspects: financing institutional innovation and financing ways innovation. The basic approach of financing innovation is to develop direct financing, further perfect the indirect financing, and guide long-term capital into the real estate market, constantly promote real estate trust, real estate investment trusts and other innovative financing tools to optimize the size and structure of capital and to realize financing diversification, develop new real estate financing mechanisms.