Why do real estate companies always like to set up a new subsidiary to develop projects?

1, which is convenient for future financing. The equity financing of the project company is relatively easy, and the use of group equity financing involves too much.

2, independent accounting, losses and responsibilities are limited to the project company, and the risks are controllable.

3. In order to keep the tax revenue in the local area, the local government will also require the group to set up a project company.

In this way, the establishment of a new subsidiary of a real estate company's development project will not affect the development and construction of other projects (such as being sealed up by the court) because of problems in one project.

Extended data

Most of the projects of real estate enterprises are outside the registered place of the company, so how to choose the business entity when operating in different places is an unavoidable problem. Project department, branch company and subsidiary company are three common choices.

1. The choice of management structure in different places is a multi-dimensional decision, not a single-dimensional decision. Many influencing factors must be considered, and their functions may be contradictory.

2. In many cases, the choice is not to seek the best result. In fact, in most cases, there is no optimal result, only the suboptimal decision under limited information, or "the lesser of the two evils".

3. Just like the short board effect, the decision-making factors that ultimately play a decisive role in off-site decision-making are often the most worrying and unacceptable factors for decision makers.

Baidu encyclopedia-real estate development company