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Nowadays construction projects in many cities are progressing rapidly, which leads to ever-accelerating profound changes to the look of the cities. Under such circumstances a real estate enterprise can have the option to develop different types of real estate projects on a certain parcel of land. Taking account of this condition as well as the uncertainty of the commercial housing price, this paper constructs a conversion option model of investment decision-making, using real options theory; meanwhile suggests rules in making investment.
Date of Conference: 6-8 May 2011