Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/16982
Title: A real option-based valuation model for privately-owned public rental housing projects in China
Authors: Li, D
Chen, H
Hui, ECM 
Xiao, C
Cui, Q
Li, Q
Keywords: Affordable housing
China
NPV
Option premium
Public rental housing
Real option
Issue Date: 2014
Publisher: Pergamon Press
Source: Habitat international, 2014, v. 43, p. 125-132 How to cite?
Journal: Habitat international 
Abstract: Chinese governments' great efforts in promoting the private sector's provision of public rental housing (PRH) have little effects, and the main reason is lack of proper provision mode and relevant valuation model. This knowledge gap is filled in by proposing a privately-owned PRH provision mode and a real option-based valuation model. In the proposed provision mode, the private sector primarily refers to private real estate developers, who will have ownership and decision rights of PRH projects. Then, the embedded real option at decision making stage is identified, and corresponding option premium (OP) is assessed by the Black-Scholes model modified with value leakage. Adding OP and conventional net present value (NPV) together, the expanded net present value (ENPV) is obtained as the investment value of a privately-owned PRH project. Finally, the proposed provision mode and valuation model are both exemplified in a PRH project, which has a negative NPV indicator but a positive ENPV indicator. Through the sensitive analysis, increasing the average rent of PRH buildings is found to be the most effective measure to enhance the ENPV indicator. Therefore, the proposed PRH provision mode is a feasible way to accelerate the private sector's provision of PRH in China, and the proposed valuation model can value a privately-owned PRH project objectively and comprehensively.
URI: http://hdl.handle.net/10397/16982
ISSN: 0197-3975
EISSN: 1873-5428
DOI: 10.1016/j.habitatint.2014.03.001
Appears in Collections:Journal/Magazine Article

Access
View full-text via PolyU eLinks SFX Query
Show full item record

SCOPUSTM   
Citations

9
Last Week
0
Last month
0
Citations as of Oct 15, 2017

WEB OF SCIENCETM
Citations

8
Last Week
0
Last month
Citations as of Oct 10, 2017

Page view(s)

45
Last Week
1
Last month
Checked on Oct 16, 2017

Google ScholarTM

Check

Altmetric



Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.