Investment Alternatives Analysis of Cluster X in a Residential Development Project, Surabaya

Azhari, Nayla Tsabitha (2025) Investment Alternatives Analysis of Cluster X in a Residential Development Project, Surabaya. Other thesis, Institut Teknologi Sepuluh Nopember.

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Abstract

This study investigates alternative investment strategies for the development of Phases 3 and 4 of Cluster X, part of the GP Residential Estate in Surabaya. The alternatives were designed by varying the composition and number of housing units across different types, aiming to identify the development plan that provides the highest financial return. A total of four investment alternatives were considered, including the existing initial plan and three proposed variations. Each alternative was evaluated using two financial performance indicators: Net Present Value (NPV) and Internal Rate of Return (IRR), with a Minimum Attractive Rate of Return (MARR) set at 7.86% as the investment decision threshold. The analysis results indicate that all alternatives, including the initial plan, generate a positive NPV and an IRR that exceeds the MARR. This suggests that each investment option has the potential to provide profit and a return rate above the minimum acceptable threshold for investors, thereby deeming them financially feasible. However, financial feasibility alone does not determine the most profitable investment. Therefore, an Incremental IRR analysis was applied to compare the alternatives sequentially based on ascending investment costs. In the final stage of comparison, Alternative 2 demonstrated a superior financial performance, offering higher net operating income with a proportionally acceptable increase in investment. The Incremental IRR value between Alternative 1 and Alternative 2 was calculated at 32.85%, significantly surpassing the MARR and confirming the financial advantage of Alternative 2. As a result, Alternative 2 is determined to be the financially superior investment option, balancing higher revenue potential with acceptable additional capital requirements. This study provides a practical framework for residential developers to evaluate investment decisions using a combination of financial metrics and staged comparison techniques.

Item Type:	Thesis (Other)
Uncontrolled Keywords:	Investment Analysis, Residential Development, Financial Feasibility, NPV, IRR, Incremental Internal Rate of Return
Subjects:	T Technology > TH Building construction > TH438 Construction industry--Management. Project management.
Divisions:	Faculty of Civil, Planning, and Geo Engineering (CIVPLAN) > Civil Engineering > 22201-(S1) Undergraduate Thesis
Depositing User:	Nayla Tsabitha Azhari
Date Deposited:	28 Jul 2025 07:09
Last Modified:	28 Jul 2025 07:09
URI:	http://repository.its.ac.id/id/eprint/122128

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