The Financial Feasibility of a Real Estate Project: The Case of the Ex Tessitoria Schiatti

摘要

Over the last decade, italian real estate market has been characterized by a steady decline in prices and demand; the phenomenon, conjunctural to a broader crisis of the european and world economy, has affected every intended use and localization, but especially the residential sector, where, at least in Italy, over 70% of all of the sales and leases are concentrated. When the market is characterized by a high degree of uncertainty about the future evolution of his prices and, consequently, about the risk on the use of the capital, the assessment of economic and financial sustainability of real estate projects, especially if characterized by a high public value, becomes crucial in order to operate the right investment choices. Interationally, the most widely used methodology for this assessment is the Discounted Cash Flow analysis (DCFA); this tool is based on the method of the discounted cash flows, namely on the discount of the balances between costs and revenues within the estimated duration of the investment. Both in public and private sectors, an intervention is considered sustainable when it is able to generate a total balance of the positive cash flows (Net Present Value) and an annual percentage of return (Internal Rate of Return - IRR), that are greater than the ones generated by alternative investments at low (or no) risk (Prizzon, 1997). The correct estimate of the costs and revenues generated from an investment becomes a crucial phase for the purposes of a reliable calculation of sustainability indicators. The difficulties concerning the costs and their accurate valuation are essentially attributable to the level of the information that is available at the time of the drafting of the project and, consequently, to the chosen method of estimation (synthetic in the concept and the design phases, analytical in the final and executive stages). When the project deals with former industrial areas, characterized by the presence of pollutants in the soil or subsoil, at the previous difficulties it is added also the uncertainty related to the correct estimate of remediation costs; these costs can only be evaluated with sufficient reliability when all the analysis related to the type of those substances have been developed and when the procedures of the intervention are defined. In relation to these operating environments, this contribution is the result of the valuations of the economic and financial sustainability of some recovery and renovation's projects developed on the area of the former Tessitoria Schiatti, in Lentate sul Seveso (Italy) (that have) It has been carried out by the students of the Workshop in Architectural Project and Constructions of the Politecnico di Milano (proff. B. Croce, S. Cattaneo, L. Sdino). These results confirm that because of the major cost of the reclamation, the feasibility of every proposed project cannot prescind from a public financial contribution that will cover those higher costs.