Study On Real Estate Investment Decision-making Model Based On VaR Theory

Real estate is the basis for guiding national economic development pillar industries, high position in the national economy. It is an important area of investment. However, the real estate investment risk is obvious. Especially the last two years, the Government has published a number of policy initiatives regulate the real estate industry. However, in this series of measures, but in 2009 a surge-like rising house prices, real estate investors abnormal reaction could not help but send questions: The existence of the real estate bubble, bubble how, how to measure the risk to real estate investment has become more scientific research and people's focus of attention and focus.Coexistence of benefits and risks is the two indivisible aspects of investment projects. The Government introduced a policy to adjust the real estate related, although beneficial to the enterprise for better opportunities, better project can win, but the industry's "Shuffle" is inevitable. How to pick good companies, how to identify a better project, how to balance between risks and benefits, how to make investment decisions, real estate investment focus and difficult. Many investors are a not experts or scholars relevant aspect, which requires a theory is simple, easy to understand, but particularly in practice, which can help the investors and consumer and guide them sensible investment choices.The risk of a long history of real estate projects, and related experts and scholars have been studying and exploring the real estate risk management, investment objective is to obtain the benefits, and many people have been working on the problem the value of real estate projects. But for the combination of the two association studies are relatively small. How to create a suitable prediction model, taking into account the situation of risk down to compare the value of future changes in the size of the project, so as to facilitate investors to invest in easy to understand decision-making is the starting point of this paper. From the perspective of risk, I give real estate investors a new way of thinking, hoping to get feedback effect. Expect to be up to the risks and value of real estate associate, use of risk measurement to compare the difference between the value of real estate projects; leading real estate investors to take the initiative to understand the risks, and positive coping; to provide a more real estate investor intuitive way to model easy to understand.In this paper, the starting characteristics of the real estate investment risks, and risks for the real estate value and unique nature of the analysis, learn real estate investment risks and foreign research advanced theories and methods will be a financial risk management, VaR the usual method of introducing real estate project risk management, for the relevant parameter to provide theoretical support for the selection. Characteristics consistent with real estate projects selected parameters and quantify the consistent use of subjective and objective, qualitative analysis and quantitative analysis of the analysis in order for the relevant theory in real estate investment projects and provide scientific basis for the application. From the risk characteristics of real estate projects and the Values of the two aspects, closely related to the content of VaR theory, VaR-based theory of subject knowledge to study it, using probability and statistics theory and Monte Carlo model of the way, using computer technology as a means of calculated, in order to make real estate investments in the scientific, rational judgments.This article uses the VaR method to build models. Use of VaR risk and value theory to associate, not a single product from a certain angle to guide investment, the investors are most concerned that the same model, can play better guidance on the role of investors. The number of its end result can be compared with each other through processed, intuitive and easy to reduce the level of investor-related requirements. Investors, market risk analysis is not necessary, experts or scholars, we can thus directly determine if they invested or will invest in the project risk status. When given a certain confidence level, specifically when the holding period, in a certain amount of historical data analysis will be able to come to a particular asset or project within the maximum loss. Moreover, VaR in certain parameters can be as individual preferences for risk adjustments to better serve investors.This theory in the use of VaR, due to the inherent characteristics of real estate projects, in the data, the choice of indicators made a corresponding adjustment. The price of the financial sector, income, yield and other data replaced by a more direct development of the industry conditions, market supply and demand, fixed costs and discount rate changes affect the volatility of real estate projects such as a sensitive factor income. In addition, some of the requirements of the conditions of the model assumptions were appropriately modified to make it more consistent with the characteristics of real estate projects. Project has one-time, non-repeatability characteristics, and poor liquidity of real estate projects, timing of cash less the investment period is often the entire duration of the project, so this selection of assets in selected when the holding period is one year or this longer time interval a few years, not in the financial field day or a week.In addition, the calculation method, taking into account the real estate market conditions, the level and accuracy of data problems, the paper chose the Monte Carlo simulation. Using this method, make up the traditional method and historical simulation method of a number of shortcomings. As the real estate project with one-time non-repeatability characteristics, risk factors, while a larger amount of investment smaller, more difficult to obtain relevant data, which determines the method of calculating the VaR value choice must be able to correspond to these characteristics and address or by adjusting parameters to solve these problems. Taking into account the problems mentioned above, this Article value calculated by the following steps. First of all, according to historical data for real estate projects affect the project choice of asset returns probability distribution of types of market factors, where choice is not to make the combination of risk factors in the overall probability distribution of types, but the risk factors for each select a closest distribution; then use historical data on the computer to calculate the probability distribution function of various parameters; based on thousands of randomly generated computer these risk factors may be set to simulate scenarios of future market factors situation; asset pricing formula linked by market factors and the relationship between the project return on assets; in a given significance level and a given holding period, the VaR values calculated using the above results.From the point of view of risk VaR theory to examine the use of real estate investment decision making, hope can provide investors with a new idea, get feedback effect, causing more scholars and enthusiasts related research of common research interest and in order to develop better theories, real estate investors so as to provide reference and draw investment decisions made by the relevant theory can better learn and use.