Asia Real Estate Capital, a private real estate investment firm, is under the gun to determine whether to invest $140 million in a joint venture for a residential project in the growing Chinese city of Chongqing. With just four days before the government's land auction, AREC wants to reexamine whether its initial underwriting for Project Python is based on reasonable assumptions about China's growth and Chongqing's booming economy, as well as whether its maximum bid price is justified. In this case students examine whether AREC has sufficient and reliable information to justify its underwriting assumptions, and consider Chinese economic and housing data along with AREC's financial analysis to determine which variables to include when building sensitivity tables.

Case id: 101706