Share:


The effect of public target on the public-private partnership (PPP) residential development

    Yong Liu Affiliation
    ; Yelin Xu Affiliation
    ; Ziyou Wang Affiliation

Abstract

A growing importance of public-private partnership (PPP) in public housing projects has drawn much attention. This paper presents a theoretical analysis exploring the effect of the public target on the private’s optimal strategy in a PPP housing project. An option-based model is established to show that an increase in the proportion of public housing will delay the project development. It indicates that the government needs to consider the trade-off between the waiting time and the supply of public housing. On the other hand, due to the delay effect, the expected project value would rise because the private developer is willing to wait for a better environment in the presence of a rise in public housing. Both private and public sector can benefit from this accurate evaluation model and its implications.

Keyword : housing supply, optimal development, project risk, public housing, public-private partnership

How to Cite
Liu, Y., Xu, Y., & Wang, Z. (2018). The effect of public target on the public-private partnership (PPP) residential development. International Journal of Strategic Property Management, 22(5), 415-423. https://doi.org/10.3846/ijspm.2018.5224
Published in Issue
Sep 24, 2018
Abstract Views
1127
PDF Downloads
711
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

References

Abdul-Aziz, A. R., & Kassim, P. J. (2011). Objectives, success and failure factors of housing public–private partnerships in Malaysia. Habitat International, 35(1), 150-157. https://doi.org/10.1016/j.habitatint.2010.06.005

Aurand, A. (2013). Does sprawl induce affordable housing? Growth and Change, 44(4), 631-649. https://doi.org/10.1111/grow.12024

Bar-Ilan, A. & Strange, W. C. (1996). Investment lags. American Economic Review, 86(3), 610-622.

Barke, M., & Clarke, J. (2016). Residential growth in Newcastle upon Tyne’s city centre: the role of the public and private sectors. Journal of Housing and the Built Environment, 31(1), 141-166. https://doi.org/10.1007/s10901-015-9444-7

Caldera, A., & Johansson, Å. (2013). The price responsiveness of housing supply in OECD countries. Journal of Housing Economics, 22(3), 231-249. https://doi.org/10.1016/j.jhe.2013.05.002

Cheah, C. Y. J., & Liu, J. (2006). Valuing governmental support in infrastructure projects as real options using Monte Carlo simulation. Construction Management and Economics, 24, 545-554. https://doi.org/10.1080/01446190500435572

Chen, C., & Doloi, H. (2008). BOT application in China: driving and impeding factors. International Journal of Project Management, 26(4), 388-398. https://doi.org/10.1016/j.ijproman.2007.07.002

Dixit, A. K., & Pindyck, R. S. (1994). Investment under uncertainty. Princeton: Princeton University Press.

Dormois, R., Pinson, G., & Reignier, H. (2005). Path-dependency in public–private partnership in French urban renewal. Journal of Housing and the Built Environment, 20(3), 243-256. https://doi.org/10.1007/s10901-005-9008-3

Heikkila, E., Gordon, P., Kim, J. I., Peiser, R. B., Richardson, H. W., & Dale-Johnson, D. (1989). What happened to the CBD-distance gradient? Land values in a policentric city. Environment and Planning A, 21(2), 221-232. https://doi.org/10.1068/a210221

Ho, D. K. H., Hui, E. C., & Ibrahim, M. F. B. (2009). Asset value enhancement of Singapore’s public housing Main Upgrading Programme (MUP) policy: a real option analysis approach. Urban Studies, 46(11), 2329-2361. https://doi.org/10.1177/0042098009342451

Hui, E. C. M., Zhong, J., & Yu, K. (2015). Housing policy, work-residence mismatch and poverty concentration. Habitat International, 48, 198-208. https://doi.org/10.1016/j.habitatint.2015.03.011

Jacob, B. A. (2004). Public housing vouchers and student achievement: evidence from public housing demolitions in Chicago. American Economic Review, 94(1), 233-258. https://doi.org/10.1257/000282804322970788

Kwak, Y. H., Chih, Y., & Ibbs, C. W. (2009). Towards a comprehensive understanding of public private partnerships for infrastructure development. California Management Review, 51(2), 51-78. https://doi.org/10.2307/41166480

Leung, B. Y. P., & Hui, E. C. M. (2005). Evaluation approach on public-private partnership (PPP) urban redevelopments. International Journal of Strategic Property Management, 9, 1-16.

Li, B., Akintoye, A., Edwards, P. J., & Hardcastle, C. (2005). Critical success factors for PPP/PFI projects in the UK construction industry. Construction Management and Economics, 23(5), 459-471. https://doi.org/10.1080/01446190500041537

Li, D., Chen, H., Hui, E. C. M., Xiao, C., Cui, Q., & Li, Q. (2014). A real option-based valuation model for privately-owned public rental housing projects in China. Habitat International, 43, 125-132. https://doi.org/10.1016/j.habitatint.2014.03.001

Li, D., Guo, K., You, J., & Hui, E. C. M. (2016). Assessing investment value of privately-owned public rental housing projects with multiple options. Habitat International, 53, 8-17. https://doi.org/10.1016/j.habitatint.2015.10.018

Liu, J., Cheah, C. Y. J. (2009). Real option application in PPP/PFI project negotiation. Construction Management and Economics, 27(4), 331-342. https://doi.org/10.1080/01446190902807071

Massey, D. S., & Kanaiaupuni, S. M. (1993). Public housing and the concentration of poverty. Social Science Quarterly, 74(1), 109-122.

Norris, M., & Hearne, R. (2016). Privatizing public housing redevelopment: grassroots resistance, co-operation and devastation in three Dublin neighbourhoods. Cities, 57, 40-46. https://doi.org/10.1016/j.cities.2015.12.006

Ong, S. E., & Sing, T. F. (2002). Price discovery between private and public housing markets. Urban Studies, 39(1), 57-67. https://doi.org/10.1080/00420980220099069

Quigg, L. (1993). Empirical testing of real option‐pricing models. The Journal of Finance, 48(2), 621-640. https://doi.org/10.1111/j.1540-6261.1993.tb04730.x

Sarkar, S. (2000). On the investment-uncertainty relationship in a real options model. Journal of Economic Dynamics & Control, 24(2), 219-225. https://doi.org/10.1016/S0165-1889(99)00005-6

Talen, E., & Koschinsky, J. (2014). The neighborhood quality of subsidized housing. Journal of the American Planning Association, 80(1), 67-82. https://doi.org/10.1080/01944363.2014.935232

Titman, S. (1985). Urban land prices under uncertainty. American Economic Review, 75(3), 505-514.

Van Kempen, E. T. (1994). The dual city and the poor: social polarization, social segregation and life chances. Urban Studies, 31(7), 995-1015. https://doi.org/10.1080/00420989420080911

Wong, K. P. (2007). The effect of uncertainty on investment timing in a real option model. Journal of Economic Dynamics & Control, 31, 2152-2167. https://doi.org/10.1016/j.jedc.2006.07.002

Xu, Y., Chan, A.P., & Yeung, J. F. (2010). Developing a fuzzy risk allocation model for PPP projects in China. Journal of Construction Engineering and Management, 136(8), 894-903. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000189

Xu, Y., Yeung, J. F., & Jiang, S. (2014). Determining appropriate government guarantees for concession contract: lessons learned from 10 PPP projects in China. International Journal of Strategic Property Management, 18(4), 356-367. https://doi.org/10.3846/1648715X.2014.971088

Yao, H., & Pretorius, F. (2014). Demand uncertainty, development timing and leasehold land valuation: empirical testing of real options in residential real estate development. Real Estate Economics, 42(4), 829-868. https://doi.org/10.1111/1540-6229.12052

Yuan, J., Guang, M., Wang, X., Li, Q., & Skibniewski, M. J. (2012). Quantitative SWOT analysis of public housing delivery by public–private partnerships in China based on the perspective of the public sector. Journal of Management in Engineering, 28(4), 407-420. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000100