China Real Estate Corporate Finance Analysis

As the backbone of national economy, the industry of real estate requires considerable investment. The characteristics of real estate companies in China mainly include the following aspects: their business scopes are relatively small; their operation resources are separated; their social resources are utilized with poor efficiency. Recent situation of real estate industry in China does not accommodate its characteristic of capital denseness. Compared to the situation of foreign real estate industry, Chinese real estate companies have a long way to go.Recently, most real estate developers in China adopt "Rolling Development" as their operation formats. Their capital resources are mainly from bank credit. Other financing methods include financing in the stock market, fiducial financing, bond financing and fund financing. The ratios of these financing methods are relatively small. Their financing structures are comparatively simple and are easily influenced by the macroscopical economy polices and economic environment. After the No. 121 Document of Central Bank was issued in 2003, the stringency policy of Central Bank put more than half of Chinese real estate companies in danger of capital lack, or even being washed out from competition. Conventional financing methods are not able to satisfy the capital requirements of recent real estate development. Since finance market in China is not fully open now, new financing methods of Chinese real estate companies will affect their competition, or even their survivals in the business sector Presently, both the practitioners from real estate industry and finance industry have been considering the problem of how to find more approaches of real estate financing. In real practice, real estate companies had not depended on bank loans as its main financing approaches. They turned to other new financing approaches such as stock market financing, overseas financing, enterprise bond, shares right financing, and real estate trust and so on. Meanwhile, researchers have suggested several ways of innovation in real estate financing. Financial capital has been the principal problem faced by real estate industry.Through addressing the characteristics of real estate industry in China and its financing approaches, this research analyzes the concepts and classification of the financing approaches of Chinese real estate companies. This research also reviews the history of financing approaches of Chinese real estate industry and analyzes their characteristics. A comparison between various financing approaches of Chinese and foreign real estate companies is also included in this research. By thoroughly exploring the concepts, characteristics and current situation of various real estate companies, this research indicates that multi-channel financing is able to satisfy the considerable capital requirement and disperse risks. Real estate financing must consider factors such as financing scope, occasion, company profit and investor's rights and interests, as well as capital resource and structure. This research also reviews the real estate financing in stock market and analyzes the characteristics and necessity of real estate companies listed in the stock market. Furthermore, this research gives suggestions on financing in the stock market of real estate companies. This research also introduces project finance and its characteristics. It also analyzes its unique advantages in real estate industry and decision-making of real estate project development. In the last part of this research, the author introduces her expectations and suggestions to the financing of real estate companies.