Studies On Risk Evaluation Score Model Of Commercial Property Investment Decision

This study aims at building up a scientific, highly reliable, and practical risk analysis tool for decision-making in commercial property investment. With the fast growth of China’s real estate industry, and steady progress in urbanization and constant upgrading of consumption market structure, the investment and construction of China’s commercial property projects are also marching into new development stage. The investment return performance of commercial property mainly relies on the results of commercial operation; however, commercial operation is not short-term behavior, its investment return needs longer term before seeing ideal results. Therefore, if one fails to systematically grasp a whole picture of project risks during the investment decision-making stage, its investment return will have to face tremendous potential threat. Given such background, in order to fill in a void in the risk study of China’s commercial property investment sector, this study intends to make an in-depth study on the key step of risk analysis in risk management.This study first makes risk identification through the combination of three plans, which include:Sort out risk identification research results for real estate development from the existing literature, establish a group of data bank on basic case samples with representative features and break down risk sources from the cases, and organize survey on commercial property risk factors among a number of experts. Through the summary and sorting of study results from the above risk identification plans, complete the risk identification study result "Commercial Property Investment Risk Factor Index".Next, carry out risk factor evaluation according to risk factor index. In the first step of risk evaluation study, create a mathematical model for risk evaluation and compile the risk calculation formula, in the second step determine the scoring scheme and marking system for risk factor index, in the third step draft the scoring benchmark for risk factor index, the fourth step uses Analytical Hierarchy Process (AHP) to organize survey in relation to the importance of each risk factor among industry experts, and calculate the weight value matching each risk factor index based on survey results. Through the above risk evaluation study process, complete the Commercial Property Risk Score (CPRS) model.Finally, make simulated evaluation of the CPRS score during investment decision making period for the basic case samples, and compare score result with status quo of the project, so as to test CPRS reliability and the reference value of risk degree represented by the score. Based on common measures of risk countermeasure, in conclusion this study offers the application method of CPRS model in designing risk countermeasure.This study makes a comprehensive appraisal of risk factor breakdown and risk evaluation plan for commercial property investment decision-making, on such basis it develops a package of systematic risk evaluation system, with which it transforms the seemingly elusive commercial property investment risks into a visible mathematical model, and fill in a void in domestic research related to investment decision-making and project management during the commercial property development process, and therefore possesses very high reference value for decision-makers of commercial property investment.