Real estate investment is an investment in land and real estate development, real estate management, and real estate acquisition in order to achieve expected benefits. Broadly speaking, the expected benefits of real estate investment vary with different investors. Government investment pays attention to macroeconomic, social and environmental benefits; enterprise investment pays attention to profit indicators; and purchasing self-used real estate pays attention to its use function. Although the pursuit of benefits is different, but the various benefits are cross-cutting and interactive. In a narrow sense, real estate investment mainly refers to enterprises'investment for profit. Real estate investment is an important part of fixed assets investment, which generally accounts for more than 60% of the whole society's fixed assets investment. It needs to mobilize a large number of social resources (including funds, land, material, labor, technology, information and other resources) in order to achieve investment benefits.
Real estate economic activity is a process of a large amount of capital movement. Once an investment decision is made, the investment of capital is a continuous process that is difficult to reverse. Accurate investment decision-making is the key to ensure the success of the whole development project. On the contrary, investment decision-making mistakes will lead to significant losses. Therefore, prudent decision-making is a necessary prerequisite for real estate development and operation. To ensure the success of investment decision-making, it is necessary to do a good job of feasibility analysis on the basis of market analysis and financial analysis.
(1) Market analysis.
The focus of market analysis is to estimate the market's demand intensity and competitive environment for real estate commodities to be developed in investment plans. Research on the market is conducive to correctly estimating future real estate earnings, and then help investors to correctly calculate future cash flows when conducting financial analysis.
(2) Financial analysis.
Investors estimate future real estate earnings through market analysis, and then estimate future cash flows. Therefore, the main purpose of financial analysis is to calculate the expected rate of return by estimating the cash flow, and to determine whether the investment is feasible by comparing the results with the required rate of return. In addition, financial analysis and investment risk assessment are conducted to determine whether the risks and expected returns are within the scope of investors'acceptance.
(3) Feasibility analysis.
Feasibility analysis is a comprehensive step. In addition to making use of the results of market analysis and financial analysis mentioned above, investors should study and judge the feasibility of the investment plan. They should also carry out relevant research on statutory restrictions such as construction and land use, so as to know whether the investment plan is feasible in statutory restrictions. Therefore, only after the feasibility analysis in the planning stage has been determined, the whole plan will be completed. Only then can it be put into practice, and the next step in the investment process can continue. Investors must understand that some modifications may be made due to the limitations encountered in the process of plan evaluation. Therefore, when making feasibility analysis, investors can not regard it as a simple process of acceptance or rejection. It actually includes the function of reassessment and revision. Usually, in order to ensure the success of investment decision-making in some large projects, feasibility analysis should be studied repeatedly. Before formal decision-making, feasibility study can be made to ensure the accuracy of investment decision-making.
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