Real Estate Investment Risk Quantitative Assessment And Avoidance Strategy

Real e8tate invesbent is full of high risk. For a real estate investInent comPany,risk management is a boOrtan part of its investInent management and a key tO success.M the further develoPment of the real etate markt of our country the oPerationmanagement of the real estate invesbont become mor regUlar,which demands ascientific and systCmatic managemeng of risk during the course of real estateinvesbefit.In thes paPer,we set uP a risk quantiative aPpraisal system for the scientific riskmanagement of the real estate invesbent whih is based on the Probabilitytheory,mathematial statistics and fmancial anaiysis theoryThis system develoPes theaPplication of the Probability theory and mathematical statishcs to the risk aPpraisal onthe base of current risk aPPraisal methods .What's more, in orde to filfulthe need ofprachcal aPplication, we create a set of risk-fmance index models in Whih we analyzefive kinds of twOrtant risk in the real estate investInen from their orighs,such as thegeneral price fluctuation risk,the markt risk, the interest rate risk,the oPeration riskand the decision risk .Ih the system,standard deviation of the NPV (net Present value )is uesed as the quantitative index of the singe risks and the whole risk .In addition, weconnect the system with risk avoiding tactics in the risk managemen of a Proect .Allthese provide a decision basis for risk management.ttis risk aPPraisal system is based on years of experiences of invesbent deeisionin the field of the real eatate investInent, is also an twrovemellt of cuxrellt riskaPPraisal methods. Tts creativity consists in that the use of the quantiative index --theatandard deviation of the NPV can make the analysis reflect the prachce morobjechvely, and that it is a OPeIilng system that new variables can be added intoaccording to the practical conditions, which both increase the prachcal value of thesystem.This system has been put into application of the decision of the real eatate investment and the results have proved its effectiveness .It has provided a favorable instruction in the investment decisions .In this paper , we give an example of a real estate investment project 梩he Zijin Garden Project. In this example ,we have calculated the quantitative value of each risk ,which is based on the objective economic data aviable .By comparision ,we get better to know the importance of each risk in the risk management. Then we give all kinds of operative risk advoiding tactics which can be applied to the practice.These tactics are so specific and purpeseful that they can take advantage of the limited resource of a real estate investment company.