Research findings
1. The real estate development process and financial risk factor happen on this process in high rise apartment project
The first objective of this study is to find the financial risk and development process of high rise apartment project. After analyzing the data, it was found out that financial risk has 4 categories: legal risk, leverage risk, financing risk, inflation risk and risk of construction cost. While the development process of high rise apartment project includes 4 phases, there are project allocating, feasibility study, contract – license – commitment and execution and sell. The financial risk factor in each phase of development process is verified by expert and this supports for the developer, the real estate company and who related in development process of high rise project to get the overview picture of real estate development process and the financial risk happen in each step of process.
2. Assessment the critical factor of financial risk on the development process and the influence of these factors to project financing throughout development process
Base on the frame work, the development process and financial risk happen in each step of process. The researcher assessed all financial risk factors in each step of development process throughout the case study. This assessment was done by the development team of Project A, who directly manages this project. The assessment of influence of financial risk factor in development process and database of this project is analyzed to get the critical factor of financial risk on development process. The financial model of project is integrated with the critical factor of financial risk throughout development process for analyzing influences of critical factor of financial risk to project financing model throughout development process.
This finding shows the practice of development process in high rise apartment project and the influence of financial risk on development process. In this finding, the legal risk and leverage risk can lead to financing risk, inflation risk and risk of construction cost on the development process. Every activity of development process has relationship to each other. So, in each phase of project, the financial risk factor has impact to each other. This finding also shows the gap of perception of Real Estate Company about the influence of financial risk on development process. The Real Estate Company always wants to control the cost of the construction project but the real estate company forgets that the more important is the maximum profit of project. With this reason, the real estate company does not understand the demand of housing characteristic for project design of each segment in market. They always focus on the cost if this project is mid end or low end project. The delay for project operation increases the inflation cost and construction cost but decrease the profit of project.
3. Recommendation to reducing the influence of financial risk to project financing throughout development process.
The project financing in real estate development process is the key for successful project. To reduce the influence of financial risk in each phase of development process is the key for making decision for risk management. In order to achieve the maximum profit of project and control the cost of project, all of financial risk need to reduced and controlled. The recommendation to reducing the influence of financial risk to project financing model throughout development process is summarized in the table below.
His thesis abstract is copied andposted.
ABSTRACT
The real estate company always want maximum the profit and minimum the cost of project. With this purpose, the real estate company manages the financial risk to get the profit and control the cost. The real estate development process is complex project and very risky. In this process, the financial risk impact to project financing dramatically. With this reason, the influence of financial risk to project financing throughout development process is studied to support the real estate company and actor related in development process in order to make solution reducing the influence of financial risk to achieve objective of project.
This research was conducted to fulfill the three objectives. (1) to investigate the real estate development process in high rise apartment project and to identify financial risk factor in each step of development process; (2) to assess the critical factor of financial risk on the development process and the influence of these factors to project financing throughout development process; (3) to purpose the conclusion and recommendation to reducing the influence of these factors on project financing throughout the development process.
The result of this study found that the perception of Real Estate Company do not correspond with the influence of financial risk. The financial risk factor impact the both source of fund and use of f
und of project which is included the project financing model throughout each phase of development process. All of consequence of risk factor is show in execution and sale phase. This makes profit of project decrease dramatically and increase the construction cost. This study also shows that Vietnam has not yet created a convenience environment for the real estate business.
Key words: Real estate, development process, project financing, financial risk, risk factor, case study, Vietnam
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