Ground swapping: an analysis of the possible economic effects of real estate enterprise

Abstract

The author, basing himself upon standard figures as to the costs and sale prices for a representative housing project for social and fixed price residences applies evaluative techniques as to investment grounded upon paying in and out flow projections and profitability ratios thus comes at an estimation of the effect on potential benefits to the owners of the building ground, the promoters of the scheme and the house buyers if trading was made on the ground in question. These benefits are then contrasted against the figures offered by a classical housing initiative in which the ground would have been bought in at the very beginning of the operation. Further on into the paper, the economic margins offered through a negotiating of the profit to be made upon the ground for building for its owner and the promoter if a swapping operation is undertaken are examined and seen to show that neither would see their profits cut by this arrangement and that these would be no lower than those from a classical operation aiming at the same ends. The paper is rounded off by an analysis of the possible incidence of variations in certain economic variables such as construction costs, final price and scheduled date for finishing upon the operations previously projected estimates. Finally the author points up the economic advantages accruing from such swapping/trading operations.