| Title |
Feasibility Study on Remodeling Project By Using Real Option Model : Focusing on Apartment House Remodeling |
| Authors |
Yeon, JungHoon ; Lee, Hyun-soo ; Park, Moonseo ; Kim, Sooyoung ; Ahn, Joseph |
| DOI |
http://dx.doi.org/10.6106/KJCEM.2014.15.1.039 |
| Keywords |
Remodeling ; Real Option ; Economic Feasibility ; Valuation ; Apartment Housing |
| Abstract |
After the global financial crisis, domestic construction industry has gone through a rapid recession. This resulted in gradual market shift towards architectural remodeling. Architectural remodeling not only improves residential environment but it has many advantages such as increase of each unit's exclusive area, free space within the horizontal or extension of an annex building, and increase number of household through splitting the household of bigger pyeong, etc. However, in case of the Korean market for apartment remodeling, due to various regulations and problem with business promotion procedures, majority of business is slow despite the figure that remodeling volume is not that small. Also, feasibility study which decides to push ahead public house remodeling business will have a flaw using net present value's law; it has a flaw of not considering properties of each phase of remodeling business and future's uncertainty. Hence, this research will improve the problem of traditional value assessment method of net present value's law. It will also consider one of the real options such as binomial model in order to supplement NPV which is used in current feasibility study. This research was based on real successful cases of public house remodeling and it was possible for feasibility study which was more realistic and valid. This research provided foundation for development of Korean public house remodeling market. There is high anticipation of increasing the validity by improving the problems of current feasibility study and economic efficiency assessment. |