| Since the land policy’reform in1980s, China’modern real estate market took shape and began to develop. Especially owing to the urban housing system reform in1990s, China’s real estate market has entered a period of more than a decade with rapid development. Yet the rapid development of China’s real estate market mainly relies on the expansion of the housing market.The main reason for real estate companies to invest mostly in the housing market rather than commercial real estate consists of two aspects. One is that the great demand for dwelling makes the housing market much more profitable. The other one is that the investment in commercial real estate calls for more fund and higher management capacity. However, with the huge profit the housing market brings companies potential risks. The concentrating investment in housing market makes companies’enslaved to the price and volatility of dwelling, resulting in higher risk. Besides, house-building needs to obtain more and more land. Thus, real estate companies become dependent on land.Commercial real estate is the real estate used for commercial purpose, including office buildings, conference centers, shopping mall and so on. The largest difference for companies between housing real estate and commercial real estate is that commercial real estate produces long-term persistent rental income, which makes the companies’earnings more stable and reliable. Real estate companies who want long-term and stable development need to incorporate commercial real estate into their businesses. In order to find if commercial real estate and housing real estate have any influence on the companies’operation results, the thesis makes an empirical research on the changes in stock yield, volatility, abnormal return and systemic risk before and after the housing-sale business function is removed from the stock.As our empirical research shows, the stocks’yields and abnormal returns drop significantly after the housing-sale business’ removal. This is because the real estate market (mainly housing market) is in a rising period. The boom of housing market makes housing real estate program more profitable. Thus investing in housing program can earn more than that in commercial real estate.However, the empirical results also show that the stocks’volatility and systemic risk also fall after the housing-sale function’s removal. This can be explained by the persistence and stableness of commercial real estate’s rental income. This is consistent with the theoretical study in the front of this thesis.Overall, commercial real estate has the characteristics of continuity and stability, which has more significance for companies’long-term development. Before incorporating commercial real estate in operation, real estate companies need to consider and analysis programs carefully and make decisions according to the market trend and the companies’actual situation. |
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