Research On Risk Management Of Real Estate Investment Trusts

Price of real estates in China experienced a sharp increase in the past few years.In aims of getting opportunities to win the competition,major developers raised debts to buy and hold lands.Chinese financial market is consequently seriously inflicted.Since forbidding speculations,Chinese central government started the intervention in real estate industry by announcing restriction orders to provide loans and lower purchases,market cooled down gradually.This intervention eventually caused a great fall in financial supports provided by banks.However,for surviving purpose,developers had to switch partnerships,instead of banks,to trust companies to rely on.Operation of trust companies,as well as safety of investments highly depend upon risk management of particular trust loans.Therefore,risks must be also taken into consideration as the number of trust products goes up rapidly.This is exactly the reason why research on risk management turns out to be vital important.Begins with a brief introduction on one of the productions that the reporter participated during working in GuoTong trust ltd,this report generally states a few personal ideas based upon academic researches of real estate trust products all around.After that,take risk-control in account,major risk factors which directly and/or indirectly influence the rate of return,were analyzed till the ability to remain stable against reducing price was ensured.On the other hand,the reporter lists some uncertainties during the production of trust properties,uncertainties of mortgage assets and/or guarantees,lack of emergency plans when risk exists,difficulties in investigating debtor's liabilities and etc.,for illustration,on basis of reporter's knowledge,advises how the problems may be settled are also listed accordingly.The reporter at the end conclusively indicates some key performances on risk-control in different stages as well as the way to improve risk management strategies.