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Is Smart Housing a Good Deal? An Answer Based on Monte Carlo Net Present Value Analysis

Author

Listed:
  • Sarah A. Elariane

    (Housing and Building National Research Center, Architecture and Housing Research Institute, Cairo 11511, Egypt)

  • Jean Dubé

    (School of Land Planning and Regional Development, Planning and Development Research Center, Leadership Teaching Chair in Economic Regional Development, Laval University, Quebec, QC G1V 0A6, Canada)

Abstract

The smart cities are considered to be an engine of economic and social growth. Most countries started to convert their existing cities into smart cities or construct new smart cities in order to improve the quality of life of their inhabitants. However, the problem that facing those countries while applying the concept of smart cities is the costs, especially for the residential sector. Despite the high initial and even operation costs for adopting different technologies in smart housing; the benefits could exceed those costs within the lifespan of the project. This article is shedding the light on the economics of smart housing. This study aims to evaluate the net present value (NPV) of a smart economic housing model to check the viability and feasibility of such projects. The calculation of the NPV based on Monte Carlo simulation provides an interesting methodological framework to evaluate the robustness of the results as well as providing a simple way to test for statistical significance of the results. This analysis helps to evaluate the potential profitability of smart housing solutions. The research ends up by proving the feasibility of this type of project.

Suggested Citation

  • Sarah A. Elariane & Jean Dubé, 2019. "Is Smart Housing a Good Deal? An Answer Based on Monte Carlo Net Present Value Analysis," Sustainability, MDPI, vol. 11(15), pages 1-29, August.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:15:p:4193-:d:254405
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    References listed on IDEAS

    as
    1. Hancevic, Pedro I. & Nuñez, Hector M., 2017. "Distributed Photovoltaic Power Generation: A Widespread Application in the Mexican Residential Sector," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258129, Agricultural and Applied Economics Association.
    2. Hug March & Álvaro-Francisco Morote & Antonio-Manuel Rico & David Saurí, 2017. "Household Smart Water Metering in Spain: Insights from the Experience of Remote Meter Reading in Alicante," Sustainability, MDPI, vol. 9(4), pages 1-18, April.
    3. Hancevic, Pedro I. & Nuñez, Hector M. & Rosellon, Juan, 2017. "Distributed photovoltaic power generation: Possibilities, benefits, and challenges for a widespread application in the Mexican residential sector," Energy Policy, Elsevier, vol. 110(C), pages 478-489.
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    Cited by:

    1. Yuyang Yu & Jing Li & Zixiang Zhou & Li Zeng & Cheng Zhang, 2019. "Estimation of the Value of Ecosystem Carbon Sequestration Services under Different Scenarios in the Central China (the Qinling-Daba Mountain Area)," Sustainability, MDPI, vol. 12(1), pages 1-18, December.
    2. Mateusz Tomal, 2020. "Moving towards a Smarter Housing Market: The Example of Poland," Sustainability, MDPI, vol. 12(2), pages 1-25, January.

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