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http://dx.doi.org/10.5762/KAIS.2013.14.11.5465

A Study on Valuation of Foreign Real Estate Investment using Real Option  

Gu, Seung-Hwan (Department of Industrial & Information Systems Graduate School of Public Policy and Information Technology, Seoul National University of Science and Technology)
Ping, Wang (Department of Industrial & Information Systems Graduate School of Public Policy and Information Technology, Seoul National University of Science and Technology)
Jang, Seong Yong (Department of Industrial & Information Systems Engineering, Seoul National University of Science and Technology)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.14, no.11, 2013 , pp. 5465-5475 More about this Journal
Abstract
In this study, when to invest in real estate abroad, to present a real option in the way of decision-making. Thus, by using the binomial option model of one of the real thing and DCF, we compared the choice of real estate investment in China and South Korea. Research concerns the real estate market of Shanghai and Seoul, Analyzed the data between 2001-2009. Results were calculated NPV investment period (Net Present Value), Seoul appears in 435.44, Shanghai was 398.26. Investment decision by NPV method will select Seoul. However, as a result of calculating the value using the real option, it was found that for Seoul appear in 615.4, Shanghai has been shown to 626.1, and is suitable for investment in Shanghai. Assuming on the basis of this, that it has invested in practice, and compare the results, Seoul is intended for since 2010, real estate prices fell to 2013 currently, damage has occurred, profit's occurred Shanghai. This ensures that when making decisions in real estate investment and to use the real option than the existing DCF is appropriate.
Keywords
Foreign Real Estate; Real Option;
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Times Cited By KSCI : 6  (Citation Analysis)
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