Real Estate Investment Projects In Economic Evaluation Studies Based On Real Option

Deep research on options in real investment under uncertainty is done in this paper. A new economic evaluation method based on real estate investment and development is established. A real options model appropriate for real estate project is put forward and the method how to estimate the parameters are ascertained. The six parts of the paper are as follows:The first part of the article briefly introduces the background, meaning and the research methods of the paper. It makes a summary of difficulties and innovations in the article, and then gives a detailed statement of the key conceptions and theories which are used in the research process.The second part makes a general summary of theories. It introduces NPV method and the real options method in real investment economic evaluation. It makes a research in-depth of the conventional economic evaluation method of in investment projects. It makes a review of applying theory, research of model and methods of parameters estimation in real options method. By comparing conventional NPV method with real options method, it concludes the situations that real options method is applicable.The third part of the paper discusses the applicability of real options method in real estate investment project. This part consists of three parts as follows: analyzing the real options characters of real estate investment and development and making clear the shortcoming of conventional NPV method; finding the types of options exist in real estate investment according to former research; making a quantitative analysis of two factors: price and scale which have influences on the project's value using historic statistical data.The fourth part of the paper designs the real options models and ascertains the parameters estimating methods. As the hard core of this paper, this chapter gives a frame which will help us to understand the new economic evaluation method of real estate investment projects better at first, then discusses the binomial model and theparameters estimating methods of real options to delay, the partial differential equation model and the parameters estimating methods of the real options to expand.The fifth part of the paper focuses on the analysis of a real project and further discussion of the application. This chapter applies the new method which be founded in this paper using the practical real estate investment and development project data to get correlative output results. On second step, the paper analyzes the advantages and the disadvantages of the new methods. Finally, we give an overall research frame of using real options method in real investment.The sixth part of the paper summarizes the paper and discusses the aspects in which the real options research can be improved and developed.