Research trends of cost control of real estate enterprises at home and abroad

First, the impact of improper decision-making of real estate development enterprises on costs At present, the investment environment of China's real estate development market is becoming increasingly complex, and various risks are emerging one after another. A little carelessness will lead to decision-making mistakes and bring huge investment risks to enterprises. Under the enterprise management system, the existence of risks will directly affect the development cost of the project. The impact of improper decision-making of real estate development enterprises on project cost is mainly reflected in the following aspects. 1. The change of economic situation affects the development cost of the project. Changes in the economic situation will lead to huge economic losses for real estate developers, such as market demand, purchasing power, interest rates, tax rates and exchange rates. From the feasibility study to the listing of real estate, the market demand is likely to change, and consumers' preferences for apartment structure and unit area will also change. In the original market segment, this kind of property is still in short supply, but it may soon have a large backlog, which will inevitably make the investment income far deviate from expectations. During the period of inflation, the currency depreciated and prices rose in an all-round way. Although real estate has certain anti-inflation ability, its price will also rise. However, people have a certain amount of money in their hands, and their purchasing power is relatively reduced, so they may not be able to pay for the rising real estate, which makes it difficult for real estate enterprises to sell projects and take risks. 2. Legal and policy risks affect the project development cost. Legal policy risk refers to the change of international and domestic political environment and the corresponding adjustment of policies and laws (such as the change of financial policy and fiscal policy, the reform of land use system and housing system, etc.), which leads to economic losses for real estate developers. The most direct impact on real estate developers is financial policy and fiscal policy. As far as financial policy is concerned, whether to implement tight monetary policy or loose monetary policy directly affects the funds held by developers and property buyers, the development and sales of projects, and then affects the cost of enterprise project development. For example, in 2007, a series of land value-added tax regulations and related measures for real estate development greatly increased the development cost of real estate projects. 3. The quality of relevant decision makers is low, which increases the development cost. First of all, in China's real estate enterprises, the quality of personnel engaged in project investigation and project estimation is generally not high. According to the investment analysis of the project scheme designated by these personnel, it is difficult for decision makers to make correct decisions, thus causing project investment mistakes and bringing certain losses to enterprises, which are included in the development cost of enterprises. Secondly, the enterprise development decision-makers themselves lack keen market insight and strategic vision, and their expectations of the project are inaccurate, blindly developing and blindly building, which makes it difficult to sell the project after development or get the expected effect after sale, and it is difficult to recover the cost or recover it slowly. Second, the reasons for improper decision-making of real estate development enterprises 1. Investment risks brought by changes in external environment. The external market environment of real estate development enterprises will often undergo unexpected adverse changes, which will lead to various risks, mainly as follows: First, serious inflation and rising prices will induce the price of building materials to rise, and the project cost will rise accordingly; Second, the currency issuance policy and bank credit policy. If banks tighten monetary policy, it means the risk of financing or liquidation for real estate developers. Third, the change of real estate supply and demand situation. The serious shortage of real estate supply has become a thing of the past. The current situation is that supply exceeds demand, house prices will naturally fall, sales will become more difficult, promotion costs will increase, and it is almost impossible to sell faster. Fourth, the real estate policy and the resulting climate. For example, at present, the bank's support for the real estate industry has shifted from development to purchase, which is not conducive to the development of real estate projects that have just been developed and need continuous investment. 2. Developers' subjective investment mistakes Real estate developers subjectively have deviations in understanding, judging or grasping the supply and demand situation of the real estate market, real estate policies and financial policies. If some developers believe too much that they will easily transfer the project, but they have not done so; Some developers only consider and analyze the temporary market supply and demand when making project decisions, without considering the development cycle factors, or are too optimistic about the market forecast and the judgment of the project's own advantages, which eventually leads to sales difficulties; Other developers' operational strength (development strength, management ability and marketing ability) is insufficient, and it is difficult for the project operation to achieve the expected business performance. 3. Due to asymmetric or inaccurate information, inaccurate cost expectation, low level of informatization of real estate development enterprises and lack of advanced means of information acquisition and collection, many real estate development enterprises are too optimistic about the purchasing power and sales prospects of the project based on inaccurate information, or the previous research is not detailed, which will lead to a big deviation from the original estimate in application, thus leading to later cost changes and increasing the development cost of the project on the basis of expectation. Iii. Measures to improve decision control and cost management of real estate development enterprises 1. Reduce the investment risk of real estate development (1) and conduct full market research and analysis. Risk refers to the possibility that the actual income deviates from the expected income due to various uncertain factors in the process of investment and operation. The best way to reduce this uncertainty and thus reduce this deviation is to make full use of information technology through market research to obtain as detailed and accurate information as possible, so as to minimize the uncertainty and better control the risks in the real estate investment process. Through a comprehensive investigation and analysis of the supply and demand situation and trend of the real estate market, choose the investment projects that the society needs most and can achieve greater returns. This part of the work can be investigated by the relevant departments of the investment enterprises, and can also be entrusted to intermediary institutions such as consulting companies. (2) Real estate development enterprises with diversified portfolio investment can selectively invest their funds in different types of real estate development projects and invest in different types of houses, offices, shops, casinos, etc. required by residents with different income levels, so as to reduce the uncertainty of future income. Because the development risks of different types of real estate are different, the income level is also different. Generally speaking, the risk of relatively high yield of development projects is high, and the risk of relatively low yield of development projects is small. If the funds are invested in different real estate development projects, the overall development risk will be reduced. Its essence is to make up for the loss of personal low-income real estate with the high income of personal real estate development, and finally get a more average income. The key to diversified investment in real estate is how to reasonably determine the proportion of capital investment in different types of real estate, so as to reduce the development risk and obtain a higher rate of return. (3) After signing a lease or pre-sale contract with tenants and customers in advance, the risks of vacant property, falling rent and falling selling price can be avoided through pre-lease and pre-sale arrangements. Of course, when pre-leasing and pre-selling, we should also pay attention to one problem, that is, the risk reduction of developers means the risk increase of customers who trade with them. Therefore, the longer the development cycle, the less willing customers in other industries are to sign fixed-price contracts with developers. If you want to pre-rent or pre-sell, the rent and selling price will be kept at a low level. 2. Effective cost control of real estate development projects (1) transfers risks through insurance means. By insuring with an insurance company, the risk is transferred to the insurance company at the expense of paying the insurance premium. As a timely, effective and reasonable way to share losses and implement economic compensation, insurance has always been the main means to deal with risks, but the use of insurance is still limited, because not all risks can be insured, and in many cases, insurance can not provide enough compensation. (2) Transfer risks through non-insurance means. Real estate development enterprises can transfer the development risk to other economic units by drafting legal and legal contract terms. For example, real estate developers subcontract the high-risk work in construction to other professional construction units, thus reducing their own risk responsibilities. Another example is the implementation of project demutualization, which will spread the operational risks to all shareholders. This method plays a unique role in some risks beyond the developer's ability, or when insurance cannot be provided. (3) directly bear the liability for compensation for risk losses, such as directly spreading the expected possible losses into the daily operating costs, or establishing a risk loss compensation fund or establishing a self-insurance company. In recent years, setting up professional self-insurance companies as the main form of self-retaining risk means has become a very attractive and promising means at home and abroad, and the choice and practice of this kind of active self-retaining risk means should follow the legal provisions. For example, whether the risk targets of statutory insurance and compulsory insurance can be retained is greatly restricted, and it is also restricted by its own economic strength. 3. Make investment decisions with reference to the target cost control scheme. Development enterprises should conduct feasibility studies before carrying out real estate development projects. If they invest blindly, the profits of enterprises will not be guaranteed, and may lead to losses or even bankruptcy of enterprises. Therefore, it is scientific and feasible to make investment decisions by using the target building cost control scheme. Before the project is established, it must be calculated repeatedly. If the total construction cost is lower than the construction cost control number, the investment project is feasible. If it is higher than the construction cost control number, it means that the expected profit has not been achieved and the project is not feasible. Through systematic and comprehensive calculation, the purpose of enterprise development projects can be guaranteed, and the business risks and unnecessary development costs brought by blind development can be reduced.