This paper has the purpose of looking into the role that financing and abandonment options play in the value of Chinese real estate development projects.
The paper is based on library research, which is used to support and extend the authors' personal knowledge and experience.
The paper finds that financing and abandonment options create important value in the real estate projects of China, and produce enormous profits for the developers.
The paper indicates that the Chinese government should improve the legislative and regulatory frameworks to control excessive value produced by the financing and abandonment options, and restrict the ability of developers to amass social wealth by exploiting legal loopholes.
The paper examines the financing and abandonment options embedded in Chinese real estate development projects, measures the specific value of the two options based on a case study, and analyzes some factors affecting the value of the two options.
