Study On Real Estate Credit Project Valuationusing Grey Option Adjusted Spread Method

The real estate industry is slowing the pace after several years of rapid, irrational development, and disadvantages of unreasonable development began looming, among which the most obvious is the deterioration in the economic environment of the real estate credit, especially the release and implementation of government credit limit, greatly cramping the development of real estate. It also makes commercial banks more cautious when they are faced with the real estate loans in order to make a scientific policy. At the same time, on March 12 in this year, Zhou Xiaochuan said that the deposit insurance system will be introduced instantly. It will bring serious challenges to the banks’ management, and in consideration of how banks to evaluate loan project much scientific is a problem to be solved. This thesis is to assess the value of real estate projects from the perspective of commercial banks.Firstly, based on the characteristics of real estate investment and credit theory, it analyzes the causes of the real estate credit project risk, and reviews and summarizes the defects of traditional evaluation methods used in real estate project.Secondly, there was a discussion in this study about the option value of real estate projects, and it also analyzes and demonstrates the feasibility of compound real options in the valuation of real estate project according to the problems existing in every phase included in the construction project, building compound real option model of credit projects. Gray prediction model was used to calculate the price volatility.Finally, due to the liberalization of deposit rates, deposit interest rate volatility increases, the uncertainty of loan program will also be further increased. On one hand the deposit rate down, increasing the loan value of the project. On the other hand interest rates upward, the actual interest rate banks get will be reduced or even get negative spreads. So use the option-adjusted spread pricing model to estimate the interest rate risk assumed by the banks to make adjustments on the option value.In the process of evaluation of real estate loan project, not only should banks explore the value though the compound option, but also they should estimate the actual loan project spreads under the background. Through the analysis of the two methods providing, a set of application model for commercial banks, a more comprehensive set of value evaluation system of real estate credit system is introduced.