ENHANCING REAL ESTATE FEASIBILITY STUDIES WITH MULTI-CRITERIA AND RISK ANALYSIS TOOLS

Jason Lim; Firman Sarifudin; Elia Oey

doi:10.35760/eb.2026.v31i2.906

Authors

Jason Lim Pradita University Author
Firman Sarifudin Tarumanagara University Author
Elia Oey Binus University Author

DOI:

https://doi.org/10.35760/eb.2026.v31i2.906

Keywords:

AHP, Feasibility, Monte Carlo, Performance Prism, Real Estate

Abstract

Conducting a reliable feasibility study is crucial yet challenging before starting any real estate project. This study presents a detailed case of a comprehensive feasibility assessment for a medium-scale real estate development in the Greater Jakarta area. It integrates multiple analytical tools, including the Performance Prism framework to identify key performance indicators, and the Analytic Hierarchy Process (AHP) alongside Pareto analysis to prioritize them. Financial viability was assessed through engineering economic calculations supported by Monte Carlo simulation. The base case simulation indicated a strong financial outlook, with a positive Net Present Value (NPV) and a healthy Internal Rate of Return (IRR). To test the project’s resilience, five additional scenarios were analyzed for sensitivity, exploring how variations in key assumptions might affect financial outcomes. This combined approach provides a thorough evaluation by incorporating both quantitative data and qualitative insights, ensuring a balanced and robust feasibility study for the real estate project.

Downloads

Download data is not yet available.

Author Biographies

Jason Lim, Pradita University

Jason Lim is a Senior Lecturer in the Civil Engineering Department, Pradita University. He also holds senior position in one of the major developers in the Greater Jakarta Area. His research areas are construction management, project management, and engineering economics.
Firman Sarifudin, Tarumanagara University

Firman Sarifudin was a student at Master of Civil Engineering, Graduate Program, Tarumanagara University. He was in her final year and was doing his thesis for Master’s degree during this research.
Elia Oey, Binus University

Elia Oey is a faculty member in International Business and Management, Bina Nusantara (Binus) University. She was a supply chain practitioner prior to join Binus University. Her research areas are operation management, (global) supply chain management and cross-cultural management

References

Akgun, M., & Oztas, S. (2017). The Performance Prism Model and Stakeholder Satisfaction Dimension. Journal of Applied Reseach in Finance and Economics, 3(1), 1–9.

André, D. N., Nwosu, J., Ikiensikimama, S. S., Joseph, N. I., & Sunday, S. (2022). Monte Carlo Simulation to Autoregressive Integrated Moving Average (MS-ARIMA) Model for Time Series Modelling and Forecasting: Case Study of Nigerian Forcados Price. International Journal of Scientific Research and Engineering Development, 5(1). https://www.researchgate.net/publication/371250498

Arnaut-Berilo, A., Zaimovic, A., & Turbo-Merdan, N. (2017, December). Effectivness of Monte Carlo Simulation and ARIMA Model in Predicting Stock Prices Nedzmija Turbo-Merdan. https://www.researchgate.net/publication/347948296

Baum, A., & Crosby, N. (2008). Principles ofInvestment Analysis. . In Property Investment Appraisal. Blackwell.

Brealey, R., Myers, S., & Marcus, A. (2007). Fundamentals ofCorporate Finance (9th ed.). McGraw-Hill Irwin.

Costello, G., & Preller, F. (2010). Property development principles and process-an industry analysis. . Pac. Rim Prop. Res. J. , 16, 171–189.

Crosby, N., Devaney, S., & Wyatt, P. (2018). The implied internal rate of return in conventional residual valuations of development sites. . J. Prop. Res., 35, 234–251.

Crosby, N., Devaney, S., & Wyatt, P. (2020). Performance metrics and required returns for UK real estate development schemes. J. Prop. Res. 2020, 37, 171–193.

Galle, W., De Temmerman, N., & De Meyer, R. (2017). Integrating Scenarios into Life Cycle Assessment: Understanding the Value and Financial Feasibility of a Demountable Building. . Buildings 2017, 7, 64.

Geltner, D., Miller, N. G., Clayton, J., & Eichholtz, P. (2007). Commercial Real Estate Analysis and Investments (3rd ed., Vol. 1). South-Western.

Graaskamp, J. A. (1970). A Guide to Feasibility Analysis (1st ed.). Education Committee, Society of Real Estate Appraisers.

Guarini, M., & Battisti, F. (2017). A Model to Assess the Feasibility of Public–Private Partnership for Social Housing. . Buildings , 7, 44.

Havard, T. (2013). Financial Feasibility Studies for Property Development: Theory and Practice. Routledge.

Havard, T. M. (2014). Appraisals: An overview. . In Argus Developer in Practice (pp. 1–12). Apress: .

Hutchison, N., Lizieri, C., MacGregor, B., Mansley, N., Portlock, R., Schulz, R., & Zhao, Y. (2017). An Investigation ofHurdle Rates in the Real Estate Investment Process.

Isaac, D., & O’Leary, J. (2013). Property Valuation Techniques. Palgrave Macmillan.

Isaac, D., O’Leary, J., & Daley, M. (2016). Property Development: Appraisal and Finance (3rd ed.). Palgrave Macmillan.

Kahr, J., & Thomsett, M. C. (2006). Real Estate Market Valuation and Analysis (Vol. 265). John Wiley & Sons.

Kennerley, M., & Neely, A. (2003). Measuring performance in a changing business environment. International Journal of Operations & Production Management, 23(2), 213–229. https://doi.org/10.1108/01443570310458465

Kolbe, P. T., Greer, G. E., & Waller, B. D. (2013). Investment Analysis for Real Estate Decisions (8th ed.). Dearborn Financial Publishing Inc.

Kwak, Y. H., & Ingall, L. (2007). Exploring Monte Carlo Simulation Applications For Project Management. Risk Management, 9, 44–57.

Mayer, L. B., & Sommerville, C. T. (2002). Irreversible Investment, Real Options, and Competition: Evidence from Real Estate Development (Working Paper 01-02).

Miles, M., Netherton, L., & Schmitz, A. (2015). Real Estate Development Principles and Process (5th ed.). Urban Land Institute.

Mona Siahaan. (2024, June 27). Gross domestic product (GDP) from real estate activities in Indonesia from 2014 to 2023. Statista. https://www.statista.com/statistics/1019729/indonesia-gdp-real-estate-activities/

Mona Siahaan. (2025, April 3). Real estate in Indonesia - statistics & facts. Statista. https://www.statista.com/topics/8596/real-estate-in-indonesia/#topicOverview

Moorhead, M., Armitage, L., & Skitmore, M. (2021). Risk management processes used in determining project feasibility in the property development process early stages by Australia/New Zealand property developers. . J. Prop. Invest. Finance, 40, 628–642.

Moorhead, M., Armitage, L., & Skitmore, M. (2022). Feasibility practices of types of property developers. . J. Prop. Investig. Financ., 41, 92–105.

Moorhead, M., Armitage, L., & Skitmore, M. (2024). Real Estate Development Feasibility and Hurdle Rate Selection. Buildings, 14(4). https://doi.org/10.3390/buildings14041045

Neely, A. (2007). The Search for meaningful measures. Management Services., 51(2), 14–17.

Neely, A., & Adams, C. (2001). Perspectives on Performance : The Performance Prism. Journal of Cost Management, 15(1), 7–15.

Neely, A., Adams, C., & Crowe, P. (2001). The performance prism in practice. Measuring Business Excellence, 5(2), 6–13. https://doi.org/10.1108/13683040110385142

Oey, E., Jourdan, F., & Kwo, D. (2022). Implementation of Performance Measurement System with Performance Prism Approach – a Case study of medium enterprise. Int. J. Process Management and Benchmarking, in press.

Ratcliffe, J., Stubbs, M., & Keeping, M. (2014). Urban Planning and Real Estate Development (4th ed.). Routledge.

Reed, R. (2021). Property Development (7th ed.). Routledge.

Rompho, N. (2015). The Uses of Measures in Performance Prism in Different Organizational Cultures. Journal of Accounting and Finance, 15(6), 122–128.

Ross, S. A., Bianchi, R., Christensen, M., Drew, M., Westerfield, R., & Jordan, B. D. (2014). Fundamentals of Corporate Finance (6th ed.). McGraw-Hill Education.

Rowley, S., Costello, G., Higgins, D., & Phibbs, P. (2014). The Financing of Residential Development in Australia; Final Report No. 219; . Australian Housing and Urban Research Institute. https://www.ahuri. edu.au/research/final-reports/219

Rubinstein, R. Y., & Kroese, D. P. (2016). Simulation and the Monte Carlo Method (3rd ed.). John Wiley & Sons.

Sarbjit Singh, Kulwinder Singh Parmar, & Jatinder Kumar. (2025). Development of multi-forecasting model using Monte Carlo simulation coupled with wavelet denoising-ARIMA model. Mathematics and Computers in Simulation, 230(April 2025), 517–540.

Yu, B., & Zhu, B. (2011). Design of performance evaluation system for the informatization of chemical enterprise based on Performance Prism. 2011 IEEE 3rd International Conference on Communication Software and Networks, 394–396.