Study On The Cost Of Bank Dev-Loan For Real Estate Project

Real estate is a capital-intensive industry; lots of money should be input into the development process. Capital fund insufficient is a common problem in this industry in our country. This means these real estate companies need to raise fund. With the development of real estate economy, this industry went through with development, boom, depression and stable. During these processes, lots of regulate and control policies been announced by government. Facing these policies, nearly every bank tightened their credit policy, this makes the dev-loan more hard for the real estate companies.Because of the tightened credit policy and limited credit scale, in order to ensure their assets superiority and profitability stability, the banks would compare more elements such as developer’s certification, credit, group’s background, project’s feasibility, profitability and so on instead of just depending on financing cost. On the developer’s side, using small amount of money to buy land use right then get bank loan by mortgaging the land use right is not practical anymore. Real estate development enterprise should do more detail plan on the whole process of project development and include the cost of financing in important job category, can enhance the competitiveness of the company comprehensively.Western countries started related research relatively early, the research of financing problem has experienced two stages, the first phase is the classical enterprise financing structure theory, the second stage is the modern enterprise financing structure theory stage. Meanwhile, financing theory research in China mainly involves in two aspects.This paper introduces the concept of bank loan of real estate development project cost and financing structure, financing risk, project risk and the relationship between the financing cost, and the introduction of real estate development project cash flow model, theoretical analysis of the factors how to affect bank loan cost of real estate development projects in China, these elements consist of scale, financing interest rate, financing, loan financing plan, etc.Through P8project case analysis and data calculation, expounds several factors affect the cost of financing them one by one is how to affect the overall cost of financing. Through the case study also carried out based on the investment estimation of the cost of financing decision analysis, based on the project loan fixed number of year of the cost of financing decision analysis, based on the expected cash flow for the cost of financing decision analysis.Through theoretical research and case analysis, it is concluded that the bank financing of real estate development project cost control can be divided into four period, according to the related factors of bank loan, cost control can be divided into loan amount, financing interest rate, loan period, payment schedule.Although I have studied the cost control methods and related elements, but as for limited professional level and experience, I couldn’t contribute a very useful model to the real estate industry.