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

Shi, J; Duan, K; Wen, S; Zhang, R

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

Shi, J Duan, K Wen, S

Zhang, R

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Publisher:: MDPI AG
Publication Type:: Journal Article
Citation:: Sustainability, 2019, 11, (7), pp. 1-18
Issue Date:: 2019-04-01

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Field	Value	Language
dc.contributor.author	Shi, J
dc.contributor.author	Duan, K
dc.contributor.author	Wen, S https://orcid.org/0000-0001-8077-7001
dc.contributor.author	Zhang, R
dc.date.accessioned	2022-07-19T03:43:24Z
dc.date.available	2022-07-19T03:43:24Z
dc.date.issued	2019-04-01
dc.identifier.citation	Sustainability, 2019, 11, (7), pp. 1-18
dc.identifier.issn	2071-1050
dc.identifier.issn	2071-1050
dc.identifier.uri	http://hdl.handle.net/10453/159020
dc.description.abstract	: 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.
dc.language	English
dc.publisher	MDPI AG
dc.relation.ispartof	Sustainability
dc.relation.isbasedon	10.3390/su11071857
dc.rights	info:eu-repo/semantics/openAccess
dc.subject	12 Built Environment and Design
dc.title	Investment Valuation Model of Public Rental Housing PPP Project for Private Sector: A Real Option Perspective
dc.type	Journal Article
utslib.citation.volume	11
utslib.for	12 Built Environment and Design
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Engineering and Information Technology
pubs.organisational-group	/University of Technology Sydney/Strength - AAII - Australian Artificial Intelligence Institute
utslib.copyright.status	open_access	*
pubs.consider-herdc	false
dc.date.updated	2022-07-19T03:43:17Z
pubs.issue	7
pubs.publication-status	Published
pubs.volume	11
utslib.citation.issue	7

Abstract:

: 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.

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http://hdl.handle.net/10453/159020