PROJECT EVALUATION OF LOW-PRICE HOUSING DEVELOPMENT TO SUPPORT GOVERNMENT PROGRAM ONE MILLION HOUSE

• Main Author: Kusuma, Bryan
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/35608
• Institution: Institut Teknologi Bandung

Backlog of house demand shows big number of 11.5 million units on 2015, which already become government concern from 2010 until now, government keep giving the attention to backlog problem, through program called one million houses, a program from president in purpose of creating opportunity for the citizen who really need the house but cannot afford it, because financial limitation. Establishing government rules to support all the party involved: banks, developers, contractors, and citizens. There are two main problem to develop subsidy property, first, increase of raw land price that affected by: land price every year on strategic location or near the capital city, maintaining good quality house material, amount permit land to fulfill, thus making a higher cost. Second, time value of money that impact on the cash flow, because limited source of fund and big capital investment at the beginning. Feasibility study will evaluate land price, financial investment return period, and cashflow impact on this project. Methodology data collection is using qualitative method data collection, by interview developer and site survey. Analysis of this project using porter’s five forces and strategy diamond to give pictures of product positioning, competitive advantages and future strategy projection of this business. Financial analysis using capital budgeting to answer the objective of business by Net Present Value, Internal Rate of Return, Discounted Payback Period and Weighted Average Cost of Capital calculation method. FLPP (Fasilitas Likuiditas Pembiayaan Perumahan) that support bank liquidity by giving loan to the bank, with loan to value of 75%, FLPP is helping customer with low rate of interest and fixed rate for 15 or 20 years on credit payment. Down payment support that give directly to low income citizen as subsidy, that makes customer able to buy the house from developer, “bantuan PSU (Prasarana, Sarana dan Utilitas)” to help and accelerate area development. Tax incentive given for both customer and developer, that customer get free tax and developer get lower income tax than non-subsidy house. All those programs create especially for subsidy house to increase customer’s buying appetite of owning a house, government program is contributing in direct and indirect value to the developer. Capital budget method for business solution is separate into three scenario case, the root cause can be determined by comparing internal rate of return to discount rate and how long the time period value of money that can be return to the developer from those three cases. Best and good scenario are feasible based on the comparison IRR and WACC of 11.28%, for best scenario shows NPV of IDR 2,678 Mio, IRR 30% and 14 months of discounted PBP, for good scenario NPF of IDR 1,036 Mio, IRR 14% and 21 months of discounted PBP. Worst scenario is not feasible because IRR is under WACC, with NPV of IDR 177 Mio, IRR of 8% and 27 months of discounted PBP. The conclusion shows existing land price is still feasible to provide financial investment return, fast progress of land permit to complete, all three scenarios give positive cash flow, and government program has contribution as tax incentive. Recommendation on support on infrastructure, facility and utilities can be update with electronic system, and construction subsidy interest rate suggest decreasing as a differentiation from commercial housing to give additional support on the program.