I. The Concept of Real Estate Finance

Real estate finance encompasses two aspects: real estate industry finance and real estate secured finance. Real estate industry finance refers to financial activities that raise and allocate funds for the real estate and its related sectors, as well as provide corresponding services.

Real estate secured finance refers to the act of financial institutions extending funds to real estate holders or third parties based on real estate as a credit condition.

II. Classification of Real Estate Finance

(1) Policy-based Real Estate Finance and Self-managed Real Estate Finance

1. Policy-based Real Estate Finance. This refers to credit activities related to the raising, allocation, and settlement of various monetary funds concerning real estate, in accordance with policy regulations. At present, it mainly refers to financial services related to housing system reform, including housing provident funds, housing provident fund loans, cooperative housing loans, and affordable housing development loans.

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2. Self-managed Real Estate Finance. This refers to credit activities related to the raising, allocation, and settlement of funds concerning real estate, conducted by banks or non-bank financial institutions within the scope permitted by national policies.(II) Direct Real Estate Finance and Indirect Real Estate Finance

1. Direct Real Estate Finance. This refers to financing activities conducted directly between the providers of funds and the demanders of real estate funds.

The main methods include: housing construction bonds, housing public bonds, land bonds, stocks and bonds issued by real estate development companies, etc.

2. Indirect Real Estate Finance. This refers to financing activities involving financial institutions as intermediaries.

The main forms of indirect real estate finance include: various long-term and short-term deposits absorbed by banks, etc.

(III) Credit Loans and Secured Loans

1. Credit Loans refer to financing activities where the borrower relies on their creditworthiness without providing any collateral.

2. Secured Loans refer to financing activities where the borrower is required to provide a third-party guarantee or property as collateral.

(IV) Banks' Real Estate Financial Services

Banks, as the most important real estate financial institutions in our country, offer a wide range of real estate financial services, which can be mainly divided into real estate credit services and non-real estate credit services. Real estate credit services refer to the absorption and utilization of funds, while non-real estate credit services refer to off-balance-sheet activities and other financial services, specifically divided into three categories.1. Asset business, based on the way banks utilize funds, can be divided into real estate investment business and real estate lending business;

2. Liability business refers to the business of banks in attracting funds, which mainly includes deposit business, lending business, and inter-financial institution transactions;

3. Off-balance-sheet business refers to the business where banks charge fees for handling payments and other entrusted matters on behalf of clients.

III. Characteristics of Real Estate Finance

(1) Concentration

In real estate development loans, real estate circulation loans, or real estate consumer loans, the participation of financial institutions and a stable and abundant source of credit funds are required.

(2) Long capital turnover period

Real estate development and construction need to go through a series of complex and time-consuming processes such as acquiring land, development, completing three connections and one leveling or seven connections and one leveling, and then construction. The use of funds in real estate, from investment to output, can take from several years to even decades to fully recover.

(3) Fixed nature of capital movement

Houses and land are inseparable in their physical form. Since land cannot be moved, real estate is fixed in a certain location and cannot be moved, hence it is called immovable property.(IV) Capital Appreciation

On one hand, real estate capital can generate returns, which is a manifestation of the appreciation of real estate capital. The appreciation of real estate capital is the result of social reproduction and is created by the labor of material producers.

(V) Riskiness

In real estate financial activities, due to the existence of many factors that cannot be anticipated in advance or are foreseeable but difficult to avoid, there is a possibility that the expected real estate returns may deviate from the actual real estate financial returns, thus there is a risk of capital loss.