Property Development Projects Research Articles

Financial viability decision rules in residual valuation method of property development appraisal: case study of London, England

Purpose An appraisal is normally conducted to determine financial viability of property development projects for several purposes. The residual valuation method is normally used to appraise such projects and the purpose of the paper is to examine its financial viability decision rules (FVDRs) used by practitioners. Design/methodology/approach The qualitative research approach was adopted based on the case study strategy of enquiry where 48 development appraisal reports from 37 Royal Institution of Chartered Surveyors registered firms in London were accessed from the internet and critically reviewed. Findings Site-specific and area-wide development appraisals for planning purposes dominated the reports. Five FVDRs were identified. A development project is financially viable if: (i) computed residual profit expressed as a percentage return is equal to or greater than a determined market benchmark risk-adjusted return; (ii) computed residual profit expressed as a percentage return is positive; (iii) calculated residual land value is greater than open market land value or benchmark land value; (iv) computed residual land value is positive; and (v) there is a surplus when appraisal cost variables including land costs plus allowance for developer’s profit are deducted from gross development value. In some reports, it was discovered some appraisal cost variables were excluded whilst others were inappropriately treated. Practical implications The first and third FVDRs are reasonable whilst the remaining are fraught with problems and using them can make development projects that are financially unviable to be viable. Also, excluding relevant cost variables and treating some inappropriately understate the appraisal cost component resulting in incorrect financial viability outcomes. These can lead to wrong recommendations about financial viability being proffered that negatively affect the practitioners’ clientele. The dominance of development appraisals for planning purposes shows the important role development appraisals continue to play in the English planning system. Originality/value To the best of the author’s knowledge, it is the first time FVDRs in development appraisals have been systematically investigated in England with resultant new empirical findings and arguments.

Stakeholder participation in the implementation of urban property development projects

In urban property development projects, attention to the needs and aspirations of local communities is often neglected. Although some developers still consider local community stakeholders to be a potential threat to their developments, in many developed countries, stakeholder participation is embedded within statutory processes such as the formal planning process and is increasingly regarded as a component of sustainable development. Even though the local community is widely recognized as an important project stakeholder, little has been done to understand how to engage effectively with this stakeholder group to resolve their concerns. The purpose of this study is to investigate practitioners’ perceptions and actions on local community participation in urban property development projects. The study is conducted through interviews with 12 actors in the southern part of Sweden. The findings show the importance of early involvement of local communities, the relevance of building community networks, trust and relations, the challenges to stakeholder participation and the need to formalize stakeholder participation in the organizations.

Barriers of Project Management in Public Property Development Projects in the Niger Delta Region

Public projects have huge differences from other types of projects, which these differences have an implication on the existing methods used in managing these projects. Often times, in the Niger Delta region, the development of public projects are faced with some project management difficulties. At the same time there is evidence of uncompleted projects, abandonment of projects, time overrun, and cost overrun by the government in the Niger Delta. These have become a continuous challenges faced by the developers, populace and government, as stated in previous studies. Therefore, the aim of the study is to examine these difficulties that arise during the development of public projects in the Niger Delta region. However, focus was given to government initiated funded projects in the Niger Delta region. The research has taken an interpretative philosophy with multiple case study approach of explanatory and exploratory case studies in project management of public property development. Quantitative and qualitative data were collected using ten (10Nr) semi-structured interviews, and one hundred and thirty (130Nr) questionnaires. The data was analysed using interpretative content analysis techniques and Statistical Package of Social Science (SPSS) version 2021. Further, the study highlighted eleven difficulties of project management in public property development. The study further recommends that the identification of nine difficulties of project management would improve the delivery of public projects and sustain the contemporary public property development projects.

Managing risk in commercial property development projects during the COVID-19 pandemic: Evidence from China

The COVID-19 pandemic is the biggest global health crisis in years. China is the first market primarily affected by the COVID-19 pandemic, with unprecedented lockdown measures bringing real estate and other economic activities to a standstill. This study has two objectives: (1) to identify the risks critical to the risk management of commercial real estate (CRE) development projects based on the project life cycle stages and (2) to identify the stages most affected by the COVID-19 pandemic and the risk factors at different stages. Three rounds of the Delphi study were conducted with nine experts involved in the construction project. The findings indicate that the construction, lease and sale phases are prone to significant risks. Additionally, the analytic hierarchy process (AHP) identified ‘health and safety risk’ as the most critical risk factor during the construction phase and ‘marketing and payback risk’ as the most critical risk factor during the lease and sale phase. This study enhanced the effectiveness of risk management practices for implementing CRE development projects in China.

Light pollution impact assessment in Hong Kong: Multi-dimensional measurement and spatial numerical modelling on integrated light sources in the neighbourhood level

Light pollution in recent years has drawn surging public concerns in Hong Kong. The improper management of the light sources causes pollution, particularly light trespass on the community level, which obstructs the residents. Yet more studies are expected to quantitatively and systematically assess the severity of the artificial light trespass problem, and to offer practical solutions for mitigation and urban management. This study was conducted on a typical high-density, mixed-use neighbourhood in Tsim Sha Tsui district. The study consists of on-site measurement and model simulation. Three illuminance measurements were conducted to evaluate the impact of light pollution on the streets and light trespass on the nearby buildings. It was found that the impacts on the buildings (mean illuminance of 3 lx) are less significant than on the streets (mean illuminance of 188 lx) for the target study area. Indoor measurement at various height levels showed a mean illuminance level of 0.6 lx, which is much lower than the international limit of 25 lx. Meanwhile, the modelling work, consisting of correlation, verification and regression analysis, was carried to bridge luminous flux from light sources and illuminance received at the target. A three-dimensional (3D) model was developed to mimic the actual situation and was used to identify the primary light sources causing impacts. While a growing number of research is found on measuring and modelling the intricate light pollution in such a micro scale that elevates explicitly the importance of extrapolating the light pollution effect vertically from street level to building level, direct simulation is still lacking. This study also refined and summarised the research methodology to serve as a feasible and organised protocol for setting up the measurement and modelling work. This can be adapted in future assessments on light trespass issues under similar circumstances elsewhere, like scientific research, urban planning, or property development projects.

Identification of Risks Exposed to The Development of Zakat and Wakaf Housing in Malaysia

Risk management is a constant effort that must be carried out throughout the life of a project. For construction and property development projects, the administration of each risk management stage is important due to the nature of the work involve

Optimal Holding Period of an Investment Property Under Different Systems of Income Taxation – An Individual Investor’s Perspective

Abstract Taxes, particularly income tax, may affect how long investors decide to hold on to an investment property. There exists a research gap regarding the implications of a distributed profit-based taxation system for the holding period of an investment asset. As a distributed profit-based taxation system allows investors to postpone income tax liability, it creates an advantage for investors operating under such a system compared to investors operating under other systems of income taxation. In this paper we model optimal holding periods under different systems of income taxation using a specific type of discounted cash flow model. We show that, theoretically, under the distributed profit taxation system, an optimal holding period for an investment property for an individual investor is the longest (ceteris paribus). This is in concordance with the circumstance that the after-tax value of the property for the investor is highest under the distributed profit taxation system. The results suggest that investment and property development projects under distributed profit taxation are not to be treated in the same way as projects under other tax systems with respect to time. Limitations of the study are related to the deterministic setting of the model as well as some restrictive assumptions.

The Affect of Localized Project Managers Factors Which Contribute To Enhance in Minimizing Project Delay of Property Developers in Selangor, Malaysia

Housing project delays among property development projects still taking place in Malaysia, according to statistics from the Ministry of Housing and Local Government Malaysia, despite the evolution and availability of various project management methods in the literature (AlSehaimi, Koskela, & Tzortzopoulos, 2013). As a consequence, in project management, an alternative research approach is needed. The aim is to investigate the factors that lead to the reduction of project delays by focusing on a few main factors, such as project manager factors, using a localised alternative research approach. The importance of localizing the analysis of these factors in property developers in Selangor, Malaysia. The study also looked at whether the respondents' demographic characteristics played a role in the disparities found in the project's success factors. Project managers associated with a Property Developer in Selangor, Malaysia, formed the study's target community. A total of 50 people have been chosen to participate in the survey. As a result of studying localized project manager causes of delay factors specifically at Selected Property Development Company in Selangor, Malaysia. A conceptual model that could help improve the reduction of project delays can be develop. This is a more localized alternative research approach, rather than a universal conceptual model.

Organizational Learning and Risk Management Maturity: Systematic and Meta-Analyses Approach

This paper summarizes the arguments and counterarguments within the scientific discussion on the issue of investigating the role of developers in the economic development of the country. The relevance of this scientific problem decision is that the risk management maturity on the part of developers is often underestimated when researching developing real estate markets. Systematization of the literary sources and approaches for solving the problem of risk management proved the presence of a significant number of studies that confirm the hypothesis that some of the developers have not reached the normalized risk management maturity scale. The main purpose of the paper is to explore the role of organizational learning in enhancing risk management maturity, as a means of setting research agenda for its empirical evaluation in emerging economies. Using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) approach, the article systematizes the scientific literature on the importance of organizational learning in managing real estate investment maturity risks in emerging economies like Nigeria. The object of the research was indexed studies on Web of Scholar, Google Scholar, Emerald and Pubmed databases. Qualitative analysis methods have become a methodical toolkit for determining the parameters of organizational learning that contribute to the achievement of risk management maturity. The paper confirms and theoretically proves that risk knowledge acquisition, integration and transformation had potentials of respectively leading to sustainable risk identification, assessment and mitigation in property development projects. The results of the study form the basis for the understanding by scholars, practitioners and policy makers of their contribution to scientific research on the issues of a risk management mature property development sector in emerging economies. The strengths of this study are that it aims to identify the importance of organizational learning in risk management mature property investment in emerging markets.

Umowa sprzedaży nieruchomości jako rzeczy przyszłej na tle prawnoporównawczym

In this article the author presents the construction and functions of a contract of sale of future goods, in particular pertaining to real property under construction. The sale of future goods contract guarantees the buyer that he will obtain the property right of the sold good automatically upon its existence (or sometimes at a later stage), the seller, that he will sell this good to the buyer. Consequently, the buyer may gain from the fact that the seller will not sell such goods to a third party and the seller may gain the price paid upon the signature of the contract, which will enable him to finance the construction of the future good. Such benefits of the sale of future goods contract can also be used in order to sell real property that is under construction. The guarantee and financing function of the sale of future goods contract is especially important in real property development projects. The sale of future goods contract has been evolving since ancient times. Presently, this type of contract has been experiencing a dynamic evolution, especially in respect to future real property. Such an evolution is though subject to legal regulations pertaining to the transfer of ownership rights of real estates that are in force in different national legal systems. Polish regulations incorporated in the Civil code enable parties to conclude sale of future goods contracts. Upon the signature of such a contract, the buyer obtains the right to acquire the ownership right of the future good. The ownership right is transferred onto him at the time when the buyer obtains the possession the now existing future good. Regulations pertaining to sale of real property differ substantially in most European countries. In some, such as Poland and Germany, real property may not be sold under the condition that it will be erected by the seller, or a third party in the future. Only existing real property may be sold. Such regulations are justified by the need to ensure the certainty of real property sales. In other countries, such as France, future buildings or apartments may be sold under a contract La Vente l’Etat Futur d’Achevement (hereinafter called VEFA). Under such a contract the buyer acquires all the existing parts of the sold real estate, while the remaining part – which is to be constructed – is acquired by the buyer automatically during the process of the construction. The seller receives his remuneration upon the completion of consecutive stages of the construction process. Also it is important to mention the construction of the sale of future goods contract as regulated in the Draft Common Frame of Reference. There, apart from the obligation of the seller to transform onto the buyer the real property rights of the sold goods, the seller is obliged to make all other necessary actions in order to enable such a transfer of rights. If the Draft Common Frame of Reference would be referred to the sale of future real property under construction, such an obligation would include the obligation to construct the real property. The analysis in this article indicates that the sale of real property under construction has been regulated in some countries and that such constructions as VEFA have had a positive impact on these legal systems. Such regulations stimulate the real property development sector and ensure better protection of consumers buying future real property. Also, as it has been shown, that the European model rules of the Draft Common Frame of Reference clearly underline the importance of the sale of future goods functions. These – namely the guarantee and financing functions – may also be used in the construction of a sale of future real property contract.

Sustainable Township and Sustainable Home: Public Perceptions


 
 
 Sustainable Townships and Homes (STSH) have become a trend in a number of countries throughout the world. However, being a developing country, Malaysia faces significant challenges in implementing the STSH idea. One of the challenges would be public support for sustainable development for new townships. Previous research has mostly focused on the framework for implementing STSH without taking into account public perceptions and expectations. Thus, this study determines public knowledge, awareness, as well as their perceptions and expectations of the STSH towards the environment and sustainability. A survey questionnaire was administered randomly to the public in Malaysia using convenience sampling. Feedback from 144 respondents indicates their good level of awareness of sustainable and smart living concepts. This awareness is reflected in their knowledge of the advantages of sustainable and smart living in terms of energy-saving, an improvement in the quality of the built environment in creating better places for people to live, and in terms of environmental protection. In general, they have an awareness of the use of energy-efficient and certified appliances, and these matters are echoed by their strong interest in living in STSH. The ranking based on the Relative Important Index (RII) revealed that the public’s most preferred sustainable home features are solar systems, energy-saving appliances, water-saving devices, and rainwater harvesting systems. In addition, the public perceives and expects that a sustainable township should include efficient building arrangements, smart building layout, and the provision of green areas in a township with sustainable and smart home features. It is evident that this study suggests that the public is currently aware of sustainable development in Malaysia. Thus, this study provides a valuable reference for a future property development project to provide better service based on public satisfaction and feedback.
 
 

Risk Management Process on the Property Development of NUSA DUA Resort Bali Indonesia

Abstract This research identifies risk sources, identifies risk factors, identifies the level of danger, identifies the level of vulnerability, identifies the level of capacity and determines risk priorities. Data collection was carried out through interviews and filling out questionnaires by resource persons involved in property development in the tourism area of Nusa Dua Resort ITDC Bali Province. The results showed that the risk factors that receive priority to be continuously mitigated and monitored are: interest rate and inflation risk, design risk, land maturation risk, and development financing risk. The level of risk in the development of the Nusa Dua Resort area is in the acceptable category so that it is feasible to build. The risk management process in this research can be applied to property development projects to help interested parties make investment decisions.

Implications of COVID–19 Outbreak on the Construction and Property Development Sector in the South-East Nigeria

Pandemic like Covid-19 usually affects the productivity of man, let alone when there is a consequent total lock-down effect in the society. Construction and property development sector among others therefore is bound to suffer enormously since it involves the services of variety of labour force. The study therefore explores the implication and consequences of the Covid-19 outbreak on the construction and property development sector in the south eastern region of Nigeria. Data were collected electronically using field survey method of research design from the sampled respondents of building professionals in the area. Tau-b correlation method was adopted in the statistical analyses to determine the most commonly observed Covid-19 measures, most common vulnerable factors leading to spread and contraction of the pandemic in the study. Findings reveal that majority of the establishment in the area shutdown their operations according to the directive of the government; while about the three quarter of these establishments who were in active operations are observed as public owned corporations or projects. It is also discovered that hand washing, wearing of face mask and social distancing were mostly complied with. On the other hand, economic hardship, inflation, and difficulty in accessibility to fund noticeably affect the flow and progress of work projects. Despite the considerable compliance with the preventive measures, there is no significant relationship between conformity to social distancing and shut-down policy, and the volume of construction works in progress during the shut-down in the study area. In conclusion therefore, it is recommended that shut-down of economic activities should not be total but, in part and alternate form among the various sections of the economic activities within the society. Attention to the operations of the private construction and property development projects like in the and the public structure is also recommended for a more holistic arrangement, towards cushioning the effect of similar economic crisis occasioned by any pandemic like Covid-19 in general.

A Passion to Repurpose: Flexibility in the Future

AbstractMartyn Evans is Creative Director of U+I, which specialises in complex, mixed‐use, community‐focused property development and regeneration projects. He looks at AHMM's engagement with office design, in particular their commercial, spatial reconfiguration, occupancy, newbuild, refurbishment and retrofitting expertise – a terrain within which they are renowned innovators.

City Information Modeling – an expedient tool for developing sustainable, responsive and resilient cities?

When initiating a property development project, an extensive amount of information has to be collected and evaluated to derive a development concept that can meet the needs, requirements and demands prevailing in the given urban context. This data is commonly gathered via desktop research and is usually not comprehensive enough to depict the whole picture. The same is true for information on development restrictions, design principles to encourage sustainable behavior of city dwellers, and information on the surrounding built environment to foster local synergies. On the building level, Building Information Modeling (BIM) has proven to be a useful tool to overcome these problems of incomplete and disjointed information and requirements. In recent years, an effort has been made to apply the principles of BIM to the city level and establish City Information Modeling (CIM) as a crucial analysis and planning tool for the sustainable cities of tomorrow. The research questions are thus: Which data sets should be included for CIM to become an expedient tool for urban development? What requirements must CIM meet? And what added value can CIM offer to all involved parties? First results indicate that CIM can contribute to the development of responsive and resilient cities, covering numerous sustainability goals.

CRITICAL SUCCESS FACTOR OF PRIVATIZATION PROJECT

Privatization is generally defined as the transfer of activity and function, particularly in the area of infrastructure development for the purpose of improving management efficiency, productivity as well as ensuring economic growth in tandem with the vision 2020. Although the privatization of certain property development projects has been successfully implemented, there are still a number of abandoned projects and the reasons for success are not fully explained. In Johor, there has been no study on the success factors of the privatization project for commercial buildings. Therefore, the objective of this study is to define critical success factors for privatized development projects and to identify developers' characteristics that affect the success factor of a privatization project by identify the successful privatization projects and selected 3 successful privatized commercial privatization projects. Furthermore, the characteristics of developers affecting the success of the project will be identified to facilitate the Johor State Economic Planning Division to identify the criteria of the developer to the project which has the potential of a successful privatization project.

Planning, property and profit: the use of financial viability modelling in urban property development

By drawing upon McAuslan’s analysis of the ideologies underpinning land use planning law, this paper examines financial viability modelling and legal processes in the context of local authority decision-making related to property development on large urban sites. A local authority can make a site ready for development by using ‘compulsory purchase’ powers to acquire land, by transferring that land to a property developer and by granting that developer planning permission to commence construction. Analysis of case law, academic criticism of viability modelling practices and a recent property development project highlight issues arising when local authority planning departments use viability appraisals to legitimise decisions purportedly taken in the public interest. An in-depth examination of viability modelling within local authority estates departments then opens a new site for critical inquiry of local authority land acquisition practices. The paper’s conclusions reflect upon how financial viability modelling shapes decision-making, despite questions surrounding both modelling techniques and the outputs that viability appraisals produce.

Interrelation of Large-Scale Property Development Project and the Local Real Estate Market. Evidence from Hungary

The Hungarian real estate market has gone through a widely fluctuating phase in the new millennium, which has not missed periods of surge, crisis-driven gloom and recovery. Amidst these conditions, an international developer engaged in a large-scale, long-timeframe residential property building project (Sasad Liget Residential Complex) in District XI of the Hungarian capital. The article examines the exposures and impacts of the development project to the external factors. The deployed quantitative statistical methods reveal that despite the considerable weight of the project, the in-market performance of SLRC has been the function of the general swings of the sector. Further, although the project generated higher demand than the bulk of other properties in the vicinity, its weight has not been enough to impact the property market of District XI at a statistically significant degree.
 JEL Classification: E31, R31

A computational analysis of construction – operation – environment cost of real estate development projects

Similar to many highly populated cities in South East Asia, Ho Chi Minh City (HCMC) is the largest city of Vietnam acting as the economic driver for the whole country. Its urban life attractions and economic opportunities have drawn people across the country and the region, resulting in a high demand of housing. HCMC becomes a hot spot for many local and foreign real estate investors and developers. Many property development projects in HCMC have been rapidly increasing in recent years. However, many real estate developers usually pay more attention on profit-related criteria while neglecting sustainable aspects, partly due to lack of knowledge and an appropriate tool. A construction - operation – environment cost analysis workflow based on an urban simulation tool coupled with other scripting and modelling tools is proposed to quantify environmental cost and operational cost besides construction cost for a real estate development project in HCMC. Three alternative design scenarios are derived from a baseline at the early stage of design process originally provided by a developer. Computational analysis from these scenarios on construction cost in comparison to operational and environmental cost provides more information to the investment decision making process allowing the developer not only to meet their investment return expectation but also to take environmental impact and residents’ expense during the project’s life cycle.

A Study on the Activation Method of Shared Property Development Projects : A Case Study on the Development of Shared Property

공유재산 개발사업이란 「공유재산 및 물품관리법」에 의거하여 기존의 공유재산을 일반재산으로 환원한 후 이를 당초의 목적과 취지에 따라 개발, 사용 수익하는 일련의 단계를 말한다. 현재 지방자치단체는 노후시설 개발을 통해 부지의 효용성과 가치를 증대시키고, 동시에 재정 부담을 줄이기 위해 「사회간접자본시설에 대한 민간투자 사업법」에 따른 개발방식을 확대하고 있다. 그러나 민간자본을 통한 공유재산 개발은 공익성을 저해하는 문제와 함께 사업의 손실이 공공에 귀속되는 문제점을 초래하는 바 민간의 자본투자에 기대는 기존의 소극적 개발 방식에서 벗어나 다양한 개발모델을 통해 공익과 수익을 동시에 창출하는 방안을 강구하여야 한다. 본 연구는 공유재산 개발의 대표적인 사업방식인 민간투자사업, 기부對 양여 사업, 위탁개발사업의 구체적인 사례와 개별 개발방식의 절차와 시행방안, 문제점, 재원조달 방안 등을 비교 분석하여 공유재산개발의 발전 방안을 모색하고, 이를 바탕으로 공유재산 개발사업의 활성화를 위한 정책 대안을 제시하고자 한다. 특히 민관협력 개발사업의 새로운 모델로 ‘확정 지분형 공유재산 개발’방식을 제안한다.