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A Comparative Analysis of the Valuation of Real Estate Companies Based on the Models of Dividend Discount, Income Method and Market Method

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DOI: 10.25236/eiemss.2022.003


Yuqi Xin

Corresponding Author

Yuqi Xin


During the Covid-19 epidemic in 2020, as early as around 2018, the Ministry of Housing and Urban-Rural Development of the People’s Republic of China (short as MOHURD), the People’s Bank of China(short as PBOC) and other ministries and commissions emphasized the policy bottom line of "houses are for living in, not for speculation", which also led to the sluggish performance of real estate companies in the capital market and had a significant negative impact on market valuation. In this context, which model may be more suitable for valuing real estate companies? In this paper, the investment value of Vanke is estimated based on the models of dividend discounting, income method and market method. It can be seen that the estimated results of the FCFF model (income method) and the dividend discount model can be close to the current share price of Vanke, but the average or median of industry P/E ratio is not applicable to the valuation of Vanke and is far away from its actual valuation. Therefore, this paper demonstrates the applicability of the income approach and the dividend discount model to the valuation of listed real estate companies, and it is worthy of further investigation by prospective scholars.


dividend discount; free cash flow; P/E ratio; real estate investment value