Third-and Fourth-Tier City Real Estate Collection Trust Plan: Research on Risk Assessment System

Abstract

With housing price soaring during the past few years, China’s government has adopted a series of policies to control the house market. As a result, housing price can hardly continue to rise and some first-tier cities, even saw a small decrease in the rocketing price. Meanwhile, due to the renovation of shanty towns and the popularity of purchasing property in the hometown, housing price in the majority of third-tier cities doubled and achieved 10,000 yuan per square metre. However, when the renovation of shanty towns ends, most of them lose the support of their property market, which exposes many real estate developers to great pressure. On the other hand, as an important financing method for property developers, how can trust assess the risk of real estate projects in third-tier cities? Based on previous research, this paper chooses Fuzzy Analytic Hierarchy Process to assess the particular risk of real estate projects in third and fourth-tier cities. It also uses a real project in a trust company to prove the efficacity of this hierarchy. We found that for trust companies, the ability to collect cash flows and the collateral of guarantees count most when assessing real estate projects in third-tier cities.

Keywords:

• Third and Fourth Tier Cities
• Real Estate Trust
• Risk Assessment
• Fuzzy Analytic Hierarchy Process