Financial feasibility studies for the inclusion of sustainable solutions in multifamily housing in Rio de Janeiro

Carlos Stozek Neto and Marcelo de Mattos Bezerra

LARES from Latin American Real Estate Society (LARES)

Abstract: This study investigates the feasibility of using sustainable system solutions in a multifamily apartment complex in Rio de Janeiro, Brazil. The apartment complex consists of thirty-two units in an eight-story building. The four proposed sustainable systems are photovoltaic power generation system, recycling and reuse of greywater, rainwater catchment and individual water metering. The sustainable systems are described in this paper, as well as the parameters commonly used to carry out a real estate development in Rio de Janeiro. Comparative analyses are undertaken between the scenario without the use of any solution and scenarios where the sustainable systems are implemented, in order to highlight the costs and the reduction of consumption generated by each system. The results are used to evaluate details of interest to developers, such as development indicators (IRR, Margin, etc.), need for adjust sale prices and consumers’ willingness to pay, as well as details of interest to the buying customer, such as generated savings and payback of the investment. This article shows that in order to match the higher cost of sustainable developments, there is a need to increase the sale price of the units. However, the increase can be justified to the consumer when compared to gains from operating expenses. The results of this study indicate that only the photovoltaic and the individual water metering systems can be classified as attractive, increasing the PSV by 1.28% and allowing a reduction to the customer in the accumulated overall cost over time, of 6.14% at the end of a cycle of 60 years. Consequently, the increase in the price of properties is compatible with the reduction of operating costs during the building lifespan, making the sustainable solutions interesting for both the buying customer and the developer.

Keywords: Financial feasibility; habitação multifamiliar; incorporação imobiliária; multifamily housing; real estate; Rio De Janeiro; sustainability; Sustentabilidade; viabilidade financeira (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2018-09-01
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:lre:wpaper:lares_2018_paper_69-neto-bezerra

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