scholarly journals Investment Valuation Model of Public Rental Housing PPP Project for Private Sector: A Real Option Perspective

2019 ◽  
Vol 11 (7) ◽  
pp. 1857 ◽  
Author(s):  
Jiangang Shi ◽  
Kaifeng Duan ◽  
Shiping Wen ◽  
Rui Zhang
Keyword(s):  
Private Sector ◽  
Real Option ◽  
Rental Housing ◽  
Tree Model ◽  
Binomial Tree ◽  
Housing Investment ◽  
Valuation Model ◽  
Public Rental Housing ◽  
Investment Valuation ◽  
The Government

Public rental housing (PRH) in China is mainly invested by the government at present. The huge capital demand brings it great pressure and a series of problems appear meanwhile. Public–private partnership (PPP) has been regarded as a way to solve the funding dilemma of PRH. However, the PRH project is not attractive for the private sector since the expected profit seems unsatisfactory based on traditional valuation methods. To improve this situation, this paper proposed an investment valuation model from a real option perspective. For the private sector, three types of options, including deferral option, abandonment option, and expansion option, were identified during the concession period of a PRH PPP project. On this basis, a two-stage binomial tree model was constructed for estimating the investment value. Then, the proposed model was tested in a hypothetical example of a typical PRH PPP project in Chongqing, China. The result shows that great potential value can be excavated through flexible strategies and adaption to uncertainties. This paper provides a deep analysis on the gaps of the real option application in public housing investment assessment, which is meaningful for improving the supply efficiency and financial sustainability of PRH.

A real option-based valuation model for privately-owned public rental housing projects in China

2014 ◽  
Vol 43 ◽  
pp. 125-132 ◽  
Author(s):  
Dezhi Li ◽  
Hongxia Chen ◽  
Eddie Chi-man Hui ◽  
Chan Xiao ◽  
Qingbin Cui ◽  
...  
Keyword(s):  
Real Option ◽  
Rental Housing ◽  
Housing Projects ◽  
Valuation Model ◽  
Public Rental Housing ◽  
Privately Owned

scholarly journals Optimal Project Planning for Public Rental Housing in South Korea

2020 ◽  
Vol 12 (2) ◽  
pp. 600 ◽  
Author(s):  
Jae Ho Park ◽  
Jung-Suk Yu ◽  
Zong Woo Geem
Keyword(s):  
Public Housing ◽  
Rental Housing ◽  
Land Development ◽  
Optimal Investment ◽  
Project Planning ◽  
Optimization Techniques ◽  
Korean Society ◽  
Housing Investment ◽  
Public Rental Housing ◽  
Gyeonggi Province

Although Korea has made notable progress in the availability of public rental housing, Korea’s public rental housing representing 6.3% of the country’s total housing is still below the 8% OECD average from 2016. The Seoul Metropolitan Area (composed of Seoul City, Incheon City, and Gyeonggi Province) has nearly 50% of the country’s population, but 11% of the nation’s territory, meaning the area suffers from an acute shortage of public rental housing. This is a serious problem which is hampering the sustainability of Korean society in general. We will examine the possibility of improving this public housing problem using certain algorithms to optimize decision making and resource allocation. This study reviews two pioneering studies on optimal investment portfolio for land development projects and optimal project combination for urban regeneration projects, and then optimizes a public housing investment combination to maximize the amount of public rental houses in Gyeonggi province using optimization techniques. Through the optimal investment combination, public rental houses were found to be more efficiently and sustainably planned for the community.

The Poverty Line and the Value of Public Rental Housing Subsidies to the Poor

2017 ◽  
Author(s):  
Yue Chim Richard Wong
Keyword(s):  
Rental Housing ◽  
Poverty Line ◽  
Poor People ◽  
The Public ◽  
Housing Subsidies ◽  
The Poor ◽  
Public Rental Housing ◽  
The Government ◽  
Ownership Rights ◽  
Sixtieth Anniversary

There is one very simple and costless way to alleviate poverty in one fell swoop. All one has to do is to transfer full private ownership rights of the public housing units to the occupying tenant free of charge. . … This would, according to the government study, lift 600,000 households in public rental housing above the poverty line. This would have been the best Christmas gift the Poverty Commission could bestow on the poor people in Hong Kong on the eve of the sixtieth anniversary of the Shek Kip Mei Fire.

A trading and pricing method of expansion options for BOT freeway projects in China

2019 ◽  
Vol 26 (7) ◽  
pp. 1406-1423 ◽  
Author(s):  
Hui Sun ◽  
Yuning Wang ◽  
Jia Meng
Keyword(s):  
Private Sector ◽  
Transaction Costs ◽  
Real Option ◽  
Liaoning Province ◽  
Public And Private ◽  
Content Type ◽  
Minimum Price ◽  
Option Pricing Model ◽  
Option Model ◽  
The Government

Purpose The purpose of this paper is to develop a trading and pricing method of expansion option (EO) model to solve expansion problems of build-operate-transfer (BOT) freeway project. Design/methodology/approach This paper proposes an ex ante mechanism through trading the EO to avoid the transaction costs. By editing the paths generated from binomial option pricing model, this paper establishes an American real option binomial lattice model and evaluates the value of EO. Data are collected from Liaoning province in China and the model is practiced in the context of a BOT freeway in Liaoning province. Findings Supported by empirical evidence, this study finds out that there exists a minimum price at which the government can sell the EO and a maximum price that the private sector is willing to pay. When the minimum price is negative, the government should transfer the EO to the private sector free of charge to avoid the transaction costs. Otherwise, the government should sell the EO at a reasonable price to protect public interests. Practical implications The study can be used for the government to reducing the transaction costs. By using the trading EO model, the government can sell its share of the EO to the private sector to manage its resources efficiently. Originality/value This paper builds a trading EO model to solve expansion problems instead of renegotiations. In addition to reducing the transaction costs for the whole society, trading EO can also raise the respective payoffs of both public and private sectors. An EO trading framework and algorithm is further developed. It realized an American option model, making the owner can exercise the option whenever he wants. Thus, the whole model is adapted to best fit BOT highway practice.

scholarly journals Land Use Incentives for Real Estate Developers in Social Rental Housing Projects (Case study: Degla Gardens Project-October Gardens-Six October City)

2020 ◽  
Vol 9 (1) ◽  
pp. 83
Author(s):  
Abeer Ahmed Mohamed Abd-Elkawy
Keyword(s):  
Land Use ◽  
Real Estate ◽  
Private Sector ◽  
Low Income ◽  
Social Housing ◽  
Rental Housing ◽  
Housing Demand ◽  
The State ◽  
Housing Projects ◽  
The Government

Social rental housing projects have emerged since 2016 to cover the housing demand of low-income groups, but these projects need high cost that beyond the financial capacity of some governments. Therefore, the World Bank reports in 2014 and 2018 pointed to the importance of including the private sector in low-income housing projects as a real estate developer instead of the state. The contribution of private sector and his successful experience in this field help in reducing the government spending towards these projects and achieving high quality in their implementation. For these reasons, many countries at international level involved the private sector in construction of social housing units in exchange for a set of incentives, which vary widely from one country to another. These incentives are classified into two main groups, the first one is financial and administrative incentives such as providing free land or selling it at low price, besides taxes and financing facilities as applied in Brazil, China, Singapore and Thailand. The second group is new incentives which called Land use incentives such as land use kind, percentage of land exploitation, proposed density and land use regulation in the housing project as applied in the United States, Japan and France because the previous financing incentives are not enough to achieve an appropriate profit for investors.At the local level, the private sector participated in many low-income housing projects such as Youth Housing, National Housing and social housing projects during the period from 1996 until now. In which the Egyptian government provided him some incentives like low price land, payment facilities, tax cuts and allocation part of land for his investment projects in exchange for building number of housing units with an area of (63 m2) for low-income groups. On the other hand, real estate companies retreated from participation in these projects because the incentives are unsatisfactory to them, which made the state played again the role of real estate developer to fill the gap in housing demand by using insufficient government budget.As a result of that, the Egyptian government is trying nowadays to re-engage the private sector again in future social housing projects by studying all submitted proposals from private sector in 2016, the World Bank in 2018 and the views of some institutions such as ministry of investment, ministry of housing and the Social Housing Fund in 2019 around the new incentives, especially after the state decided to withdraw from real estate development and leave it to the private sector by the year 2020. Hence, this paper tries to introduce the new incentives for private sector to participate again in social housing projects. The formulation of these incentives comes from revision the international experiences and reports as well as evaluating the applying of old incentives in one case study of participation housing projects (Degla Gardens project to find an integrated vision for suitable incentives in Egyptian reality that achieve the goals of all development parties ( the government-private sector-population).

Pricing Based on the Binary Tree Model under Public Infrastructure Projects

2013 ◽  
Vol 756-759 ◽  
pp. 2971-2974
Author(s):  
Dong Jun Fan
Keyword(s):  
Binary Tree ◽  
Real Option ◽  
Policy Recommendations ◽  
Infrastructure Projects ◽  
Public Infrastructure ◽  
Tree Model ◽  
The Real ◽  
Pricing Research ◽  
Infrastructure Project ◽  
The Government

[Purpos] In order to address the problem of pricing public infrastructure project based on the binary tree model. [Metho] By the real option binary tree model. [Conclusion This article makes a pricing research on public infrastructure projects to. At the same time, this article makes policy recommendations for the investment powers and the government respectively.

Study on the Improvement of Public Rental Housing Development and Operation Model Based on Full Life Cycle Theory

2014 ◽  
Vol 1079-1080 ◽  
pp. 1220-1223
Author(s):  
Bin Guo ◽  
Hai Bo Mu ◽  
Ao Jiao
Keyword(s):  
Life Cycle ◽  
Life Cycle Cost ◽  
Cost Model ◽  
Operation Mode ◽  
Rental Housing ◽  
Policy Support ◽  
Housing System ◽  
Full Life Cycle ◽  
Public Rental Housing ◽  
The Government

Public rental housing plays an important role in the construction ofsecurity housing system in our country, but in the current development andoperation mode, public rental housing project of its own financial viabilityCo., need the government to give large amounts of funds and policy support, thedependence is strong, is not conducive to sustainable development projects,limiting its security role play. In this paper, by using the life cycle costtheory, the construction of public rental housing life cycle cost model,analyze the existing problems in the development and operation mode, and thenputs forward the improvement direction of development and operation pattern,causes it to have certain financial viability, provide policy recommendationsfor the future development of China's public rental housing.

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