Competitive Advantage Evaluation of Real Estate Industry Based on Principal Component Analysis: An Illustrative Example from China

Compared with the extensive research on Competitive Advantage Evaluation of Real Estate Industry (CAEoREI) in developed countries, empirical work is still rare in China. Therefore, we deeply analyze the evaluation and empirical study of CAEoREI by the usage of Principal Component Analysis (PCA) method. Based on the literature review of CAEoREI and explanation of principal component method, a new evaluation index system for CAEoREI evaluation is set up which contains fourteen factors, namely Gross Regional Product per Capita (GRPpC), Disposable Income of Urban Households per Capita (DIUHpC), Consumption Expenditure of Urban Households per Capita (CEUHpC), Number of Employed Persons in Enterprises for Real Estate Development (NEPERED), Number of Enterprises for Real Estate Development (NERED), Total Investment in Residential Buildings (TIRB), Earning of Employed Persons in Real Estate (EEPRE), Floor Space of Buildings Under Construction (FSBuC), Floor Space of Buildings Completed (FSBC), Price of Commercialized Housing Sold (PCHS), Area of Commercialized Housing Sold (ACHS), Value of Commercialized Housing Sold (VCHS), Completion Rate of Floor Space of Buildings (CRFSB), Rate of Projects of Fixed Assets Completed and Put into Operation (RPFAC&PO), to classify 30 main regions (including 22 provinces, 4 municipalities and 4 autonomous regions) in People's Republic of China into 4 clusters according to their characteristics. Finally, we draw some good conclusions for improving their CAEoREI and make suggestions for future study.