| Original language | English |
|---|---|
| Pages (from-to) | 101-116 |
| Number of pages | 16 |
| Journal | International Journal of Housing Markets and Analysis |
| Volume | 11 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published (VoR) - 23 Jan 2018 |
Funding
Despite the FPOM embedded with a staging option offering superior results than developing the whole project at once, as assumed by the DCF framework, the importance of presale in risk mitigation in the DCF, for example, cannot be discounted. In terms of risk mitigation, presales allow developers to secure potential purchasers before construction begins, thereby eliminating risks of lack of demand after completion though defaults at settlement could still occur. It also serves as a requirement for attracting debt funding from commercial financial banks and reduces borrowing costs for the project in question. Deferring some of the presale contract agreements with prospective occupiers to capture the value associated with upside opportunities if there was enough equity to begin the project could have ensured higher profitability in a market where property values are on the rise.
Keywords
- Discounted cash flow
- Financial feasibility evaluation
- Property development
- Real options
- Residential
- Staging option