Evaluation and optimization of the financial sustainability of public rental housing projects : a case study in Nanjing, China

Abstract

In recent years, Chinese governments have launched ambitious plans in developing public rental housing (PRH), which are almost impossible to accomplish without the involvement of the private sector. Yet, very few quantitative studies have been carried out to evaluate the financial sustainability of PRH projects in China, especially from the perspective of the private sector. This knowledge gap is bridged through the evaluation of the financial sustainability of a hypothetical privately owned PRH project in Nanjing, China as a case study, utilizing data of a state-owned PRH project and the classic discounted cash flow method. The results indicate that the studied project is financially infeasible, which means that private companies would not be willing to participate in the provision of public rental housing, if they merely focus on profits. Then, the most cost-effective optimization measure of the studied case is quantitatively selected from four possible optimization scenarios, leading to a financial balance. This paper presents the current financial status of Chinese PRH projects, thereby providing policy makers with useful references to effectively accelerate the private sector's provision of PRH in China.