African Journal of Estate and Property Management

African Journal of Estate and Property Management ISSN 2756-3308 Vol. 8 (2), pp. 001-010, February, 2021. © International Scholars Journals

Full Length Research Paper

Real estate investment in seismically active regions: Feasibility assessment and decision making

Jeng-Hsiang Lin

Hwa Hsia Institute of Technology, No.111, Gongjhuan road., Jhonghe District, New Taipei City 23568, Taiwan (R.O.C.). E-mail: hsiang@cc.hwh.edu.tw. Fax: 886-2-29454892.

Accepted 27 September, 2020

Abstract

Lots of major cities worldwide are located in the seismically active regions. Due to natural disasters, the profits of real estate investment in these regions may be corroded. This study proposed a reliability-based decision making process for real estate investment in seismically active regions. Based on the Monte Carlo simulation technique with net present value (NPV) as the indicator, a sampling process was repeatedly performed to construct the relation curves of annual rate of return versus corresponding reliability for candidate investment projects. Then, these curves were used as a tool to prioritize the projects and make decisions. An example to demonstrate the decision making process and illustrate how to effectively estimate potential costs to repair earthquake damages was presented.

Key words: Real estate investment, feasibility assessment, decision making, net present value, reliability.