Valuation Of Commercial Real Estate' Basic Discount Rate

With the acceleration of Chinese economic development and the continuous urbanization,the commercial real estate industry,which combines real estate,business and investment,has attracted more and more attention.On the one hand,the country has accelerated the transformation of real estate industry,the short period and fast rapid of development and sales has passed,the real estate enterprises actively dig business opportunities which make this industry become the new object of capital preference;On the other hand,as an important branch of the real estate industry,its scale become increasingly large.According to data from National bureau of statistics,in 2012 Chinese commercial business premises investment of 931.2 billion yuan,the number rose to 1.583753 trillion yuan in 2016,just five years,grew by 70%,and it keeps growing at about 10% each year.From itinerant traders to low-level shops and urban commercial streets to modern urban complexes,the commercial real estate industry has become an important part of Chinese economic development.Therefore,it is an important task to evaluate the value of this industry.The income method is an important method to evaluate commercial real estate,and the yield parameter plays an important role in the evaluation result.In combination with the characteristics of commercial real estate industry,this paper analyzed the limitation of traditional benchmark discount rate determination method in solving commercial real estate industry benchmark discount rate,and finally decided to use Fama-French three factors model as the basis and adding improvement factor to determine a more suitable method for commercial real estate.By the improving model,the return on equity capital of commercial real estate industry was 3.54% to 7.89%,and then the benchmark discount rate of commercial real estate industry was determined as 4.54% to 5.69%,combining with the WACC model.Among them,the commercial real estate form of office building and hotel form,the discount rate is of the lower level,shopping center,complex and other forms,which generally require a higher discount rate.