Case Study Of Real Estate Development Risk Management

Since China’s housing system reform in1998, the real estate market has been proceeding by leaps and bounds. Taking Guangzhou Central District as an example, the residential real estate prices rose from3000yuan per square meter in2000to30000yuan per square meter in2013. The price has surged nearly tenfold. Driven by huge market space and profit benefits, people originally in other industries began to invest in the real estate, thus providing a good competition platform for the rapid development of the real estate market and the product diversification. But at the same time, This resulted in many problems, such as differentiated quality of products, lack of awareness of risk control by developers, lagging behind of management, which brought more uncertainty for the real estate project development.Taking Guangzhou Garden (alternative name) project as a typical case, this paper discussed risk management during the whole process of those inexperienced small-and-medium sized real estate enterprises. Through the classification of the risk factors and risk events in the development process, applying case analysis, this paper made risk analysis in line with systemic risk and non-systemic risk and provided some risk management recommendations in the aspect of risk identification, risk assessment and risk response measures. The systemic risk analysis mainly focuses on the policy risk, natural risk, economic risk, technical risk and legal risk and the non-systemic risk analysis mainly focuses on risks in different stages, such as the risk during decision and design stage, bidding and construction stage, property management and marketing stages and so on. Based on case analysis, this paper tried to identify the risk factors which have a severe impact on the project development and analyses the precaution countermeasure against those risks. There were two main risk sources of Guangzhou garden project:One risk lies in the fact that the developer enters the field of real estate for the first time and lacks the experience of risk management;The other is that the development period (during2006to2011) coincide the big regulatory changes in China’s real estate market when changes in land policy, financial policy and industrial policy caused many uncertainties. Despite those adverse risks, the project obtained significant economic benefits and sound social benefits. Finally, through the risk and countermeasure analysis on Guangzhou Garden real estate during the whole process of development, it is hoped that this paper can provide some useful references for those inexperienced small-and-medium sized real estate enterprises.