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Evaluation and Optimization of the Financial Sustainability of Public Rental Housing Projects: A Case Study in Nanjing, China

Author

Listed:
  • Dezhi Li

    (Department of Construction and Real Estate, Southeast University, Nanjing 210096, China)

  • Yanchao Chen

    (Department of Construction and Real Estate, Southeast University, Nanjing 210096, China)

  • Hongxia Chen

    (School of Civil Engineering, Sanjiang University, Nanjing 210012, China)

  • Eddie Chi Man Hui

    (Department of Building and Real Estate, The Hong Kong Polytechnic University, Kowloon, Hong Kong, China)

  • Kai Guo

    (Department of Construction and Real Estate, Southeast University, Nanjing 210096, 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.

Suggested Citation

  • Dezhi Li & Yanchao Chen & Hongxia Chen & Eddie Chi Man Hui & Kai Guo, 2016. "Evaluation and Optimization of the Financial Sustainability of Public Rental Housing Projects: A Case Study in Nanjing, China," Sustainability, MDPI, vol. 8(4), pages 1-13, April.
    • Handle: RePEc:gam:jsusta:v:8:y:2016:i:4:p:330-:d:67575
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    References listed on IDEAS

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    Cited by:

    1. Shumin Zhou & Huijun Sun & Tianchao Guan & Tongfei Li, 2018. "Equilibrium Model of Housing Choice for Heterogeneous Households under Public Rental Housing Policy," Sustainability, MDPI, vol. 10(12), pages 1-21, November.
    2. Jingfeng Yuan & Xiaodan Zheng & Jia You & Mirosław J. Skibniewski, 2017. "Identifying Critical Factors Influencing the Rents of Public Rental Housing Delivery by PPPs: The Case of Nanjing," Sustainability, MDPI, vol. 9(3), pages 1-22, February.
    3. Chih-Yao Huang & Ren-Jye Dzeng, 2019. "Evaluating Ancillary Business Scale for PPP-BOT Projects: A Social Housing BOT Case in Taiwan," Sustainability, MDPI, vol. 11(5), pages 1-17, March.
    4. Dan Luo & Harry van der Heijden & Peter J. Boelhouwer, 2020. "Policy Design and Implementation of a New Public Rental Housing Management Scheme in China: A Step Forward or an Uncertain Fate?," Sustainability, MDPI, vol. 12(15), pages 1-25, July.
    5. Guangdong Wu , & Kaifeng Duan & Jian Zuo & Xianbo Zhao & Daizhong Tang, 2017. "Integrated Sustainability Assessment of Public Rental Housing Community Based on a Hybrid Method of AHP-Entropy Weight and Cloud Model," Sustainability, MDPI, vol. 9(4), pages 1-25, April.
    6. Chu Chu & Rie Nomura & Suguru Mori, 2019. "Actual Conditions of Mixed Public–Private Planning for Housing Complexes in Beijing," Sustainability, MDPI, vol. 11(8), pages 1-19, April.

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