In Real Estate, What Is an Absorption Rate?

Real estate finance is a general term for a series of financial activities in the process of real estate development, circulation and consumption, through financing, financing and related financial services through currency circulation and credit channels. Its basic task is to use a variety of financial methods and financial instruments to raise and finance funds, support real estate development, circulation and consumption, promote a virtuous circle of funds in the real estate reproduction process, and ensure the smooth progress of the real estate reproduction process. ^[1]

Real estate finance

(Financial terminology)

Real estate finance has broad and narrow sense. Real estate finance in a broad sense is all financial activities related to real estate activities. The narrow sense of real estate finance manifests itself in some specific forms of finance, such as issuing bonds to real estate banks,

Real estate finance includes policy real estate finance and commercial real estate finance. The policy real estate finance is mainly housing reform finance, which is related to

(1) Real estate finance ^[3]

(1) Concentration ^[4]

The status and role of real estate finance in the national economy and people's daily life are becoming increasingly prominent. Real estate financial behavior has a direct impact on the effectiveness of individual housing, real estate business and economic markets. The large amount of capital required by the real estate industry and the "

Causes of Real Estate Financial Risk in China

1. The financing structure of the real estate industry is unreasonable. In recent years, due to the lure of profits, many companies have been involved in the real estate market, but the number of companies that can actually meet the financing standards for listing is very small. The main source of financing for most businesses is bank loans. The national real estate bank loan reliance level is around 50%, and some large city developers have relied on bank credit funds for more than 80%. Banks actually bear the risks of various links in the real estate market directly or indirectly. Once a problem occurs in one link in the real estate market, the risks will be passed to the banks, causing overdue loans and sluggish funds.

2. Relevant policies and laws are not complete. The prosperity of the real estate market in a region depends on whether the policies issued by the country and region can stimulate the development of real estate. However, a more extreme tendency has emerged: some regions are pursuing one-sided GDP growth, emphasizing the role of the real estate industry in promoting economic growth, which has caused the local economic growth to rely too much on real estate development investment. And when the real estate development company has poor credit, no completion period and no guarantee of house quality ^[5] , the current practice of using virtual real estate as collateral will bring greater risks to banks.

3. Asymmetric information between banks and developers. In terms of possession of information sources, developers have advantages over banks. Due to the extensiveness of the banking client industry and the distant source of information, banks can only learn about developers' information through indirect channels. The development enterprises not only have direct access to all their own information, but also understand the risks of real estate development. However, due to the characteristics of high real estate yields and the imperfect credit system in China, real estate development enterprises are liable to borrow from banks. If the development project is successful, the developer can make small profits and make huge profits; if the development project fails, the bank will bear the bulk of the loss.