Evaluating Ancillary Business Scale for PPP-BOT Projects: A Social Housing BOT Case in Taiwan

Chih-Yao Huang and Ren-Jye Dzeng
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Chih-Yao Huang: Department of Civil Engineering, National Chiao Tung University, Hsinchu 300, Taiwan
Ren-Jye Dzeng: Department of Civil Engineering, National Chiao Tung University, Hsinchu 300, Taiwan

Sustainability, 2019, vol. 11, issue 5, 1-17

Abstract: Due to budgetary constraints, the government releases the right to ancillary business development for private investors to increase profits in PPP projects. However, the ancillary business scale is not specified in the regulations, and there is little relevant research on modeling the scale. Thus, our research aims to create a model with mathematical analysis to evaluate the ancillary business scale. The model is constructed based on the discounted cash flow model to calculate the ancillary business scale attracting private investors with a case study of a social housing project. For this case, the calculated ancillary business minimum scale (ratio of ancillary business to project in total floor area) based on the 7-year (2009–2016) and 17-year (2000–2016) data are 30.81% and 52.79%, respectively; neither is able to meet the scale listed in the tender condition regulated by the government, i.e., 25%. Moreover, this study performs a sensitivity analysis on the expected rate of return and rent discount of the case. The government needs to raise the proportion of ancillary businesses or to increase the rent of social housing to successfully attract private investors.

Keywords: PPP; BOT; ancillary business; social housing; Taiwan (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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