| The real estate industry is one of the mainstay industries of the global economy.It is playing a vital role in keeping national economy running smoothly,maintaining social stability and unity,and supporting lasting harmony and safety of the country.Real estate investment has some specific characteristic,such as high-cost,long-period,high-stake and irreversible-decision.During the whole development and construction process of a project,politics,economy,society,market,law,culture,technology and other elements all impact on it and bring about unstable factors.Therefore,it is a burning question for investment decision-makers to find a scientific,proper and effective way thereby to optimize allocation of resources,mitigate risks and cope with the increasingly uncertainty in business environment and fierce competition in market.Up to now,investment decision-makers have already used a variety of methods in their judgment,for example,net present value,investment payoff period,intern rate of retain and other traditional methods based on Discounted Cash Flow Theory.However,these methods have some defects in practical use.Many unstable factors are neglected due to their static perspective of view,the same as the added-value produced by decision flexibility.It will provide a new idea for investment decision-makers by introducing real option theory into their judgment and decision.Real option method is an improvement and extension rather than denial of traditional method.All the same time,real option method also has its own deficiencies.For instance,when we use the successive Black-Scholes Pricing Model,which is quite a common-used one,the future cash flow and costs are expressed by firm figures.Hence the uncertainty figures are not reflected totally in this way.So it is the motive of this paper that to provide a new way of thinking for real estate project investment decision making.H Company is mid-scale real estate agency,with residential property as its main business,concurrently engaged in commercial property,hotel management and estate management.H Company gets access to land actively,exploits quickly and sales quickly all this time.However,its profit margins are still not so high as what it expects.What's worse,its investment decision making made mistakes ever.Through investigation and research on the spot in H company,I have gained some understand-ing in its project development process and investment decision making system.Based on my deep thinking and careful analysis,I consider that there may be some problems,for example,prediction of cash flow and cost may not be reliable enough,immoderate reliance on Milestone Plan and lack of decision flexibility,not given sufficient weight to the value of future growth and lack of a scientific way to decide development time,that is to say,when to develop may bring the most revenue and value to the company.All the problems mentioned above indicates that there is a far cry from 'profit is preferred and scale is the second',which is H Company's strategic objective.In order to optimize H Company's investment decision making,this paper makes some improving vision.Normal cloud model make it possible for uncertain factors to conversion from qualitative to quantitate.So it can be used to predict the range of cash flow and development cost.Meanwhile,real option pricing model is conducive to focus on the future value,thus can be used in analysis.Volatility is a significant parameter in real option pricing model.This paper will use fuzzy group decision method to pertinently calculate cash flow volatility of a specific project,thereby the degree of uncertainty of a project is able to be estimated properly.Then the value region of real option can be analyzed according to the Cloud Model partition principles.Comprehensively utilizing the tools of normal cloud,real option and fuzzy group decision in an integrated manner,the real option value of different development time spot can be properly calculated and compared,so that investment decision-makers can select developing time spot scientifically and effectively?This paper will combine qualitative research by theory and quantitative study by case.A more scientific method created by the combination of the cloud theory,as a new frontier developed recently,and the real option theory,will be applied to Project X.By comparing the result of the new method with traditional method,superiority of the former will be revealed.At the same time,this paper will try to build a brief project decision-making frame for H Company by normal-cloud and real option method.This paper expects to improve and optimize H Company's decision method,hoping to solve the problems remaining in H Company's project investment decision-making system.What calls for special attention is that Cloud Model-Real Option Approach may not necessarily apply to all the real estate agencies,and all the projects in one certain company by the same token.Its scope of application and condition of use is expressed in the explanatory paragraph.Maybe through this way,this paper is able to provide some reference for other companies in the meantime. |
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