Real Estate Investment Risk Evaluation Based On Entropy Method

The real estate market has experienced a splendid development since our countryopened to the whole world. However, compared with the matured estate industry inwestern developed countries, it is still at the initial stage. There obviously exist manyproblems: one of the most significant representatives is the weak risk awareness of theinvestors. In order to pursue higher return, the investors often blandly develop, disorderlyoperate and pay no attention to market investigation. Many of the projects lack scientificeconomical forecast, objective feasibility analysis and consummate investmentdecision-making method. All of these make the investment of real estate industry facingwith enormous risk. This article puts forward the Optimized Entropy Weight Model forrisk analysis in real estate.The main conclusions in this article are as follows:First, bring in "risk" conception. We pointed out that there was a sensitive but advancedrelationship between real estate and gross national economy. And we review the researchsituation about investment risk about real estate. The real estate treated as the oriented andpillar industry must be a new economical growth point in our country.Second, Entropy, proposed by Clausius, a German physical scientist, was first a unit inthermodynamics, and then was applied in many other arenas. We introduce ten fieldsabout entropy theory to appraise systematically this theory. And we introduce the entropyand entropy weight. Entropy weight is divided into continuous and discrete entropy theory,and entropy theory is right to multi-objective evaluation. According to the particularity ofreal estate industry, this article set up a new Optimized Entropy Weight Model usingthought in both Operational Research and Entropy Theory.Third, in order to testify the model that we have established in this article, we applieddata of one real estate investment project in Shanghai, and we found that this model basedon Entropy Weight Theory tallied well with the reality. Besides, because of the higherreturn that the model indicated, we could expect to use our model to further maximize theresults. We believed we could receive more benefits if we instruct the real projects by ourmodel.