Highest and Best Use Analysis for an Apartment with Office Buildings or Shopping Centers in East Surabaya

. Surabaya is the capital of East Java and the center of community activities. A developer has a plan to build a residential area in East Surabaya, located on Dharma Husada Indah Barat III road with an area of 7.123 m 2 . After considering many aspects, there are two alternative ideas that really attract the attention of this developer, namely, apartments with office buildings or apartments with shopping centers. The best decision results of the two alternatives can be analyzed through the highest and best use (HBU) analysis method. The HBU must fulfill four criteria, that is, legally permissible, physically possible, financially feasible, and maximally productive. Of the two scenarios, the one that meets the HBU aspect is an apartment with office buildings, with the annual internal rate of return of 99%, the net present value of Rp. 563.448.604.512,- with payback period 60,46 months and discounted payback period 60,8 months.


Introduction
Surabaya city is the capital of East Java and has become the center of community activities. This causes the increment of the population's growth in Surabaya [1]. A developer from Surabaya has a plan to build residential development with a huge potential location in East Surabaya, specifically, the development of Outer East Ring Road (OERR) and also East Surabaya, which is the largest property supplier with percentage 47%. The developer plans to make a residential area with offices facility or shopping centers located on Dharma Husada Indah Barat III with an area of 7.123 m 2 . The best decision results of the two alternatives can be analyzed through HBU analysis method. HBU analysis must fulfill four criteria, that is, legally permissible, physically possible, financially feasible, and maximum productivity [2].

Theoretical Basis
As aforementioned, the HBU must fulfill four criteria and requirements complying to KPSPI, namely: 1. Legally permissible Things that need to be seen in the regulatory aspects include the requirements for inspecting the location's zone and building codes (Mubayyinah and Utomo, 2012).

Physically possible
Tests of physical aspects have a close relationship component with soil characteristics [3]. These includes: a) Building and facility form  Apartment categories  High-rise apartments, an apartment with more than ten floors and provides parking areas.  Mid-rise apartments, an apartment consisting of six to ten floors.  Walked-up apartments, an apartment consisting of three to five floors  Garden apartments, an apartment consisting of two to four floors and this type of apartment has a courtyard and garden around the building.  Shopping center categories  Neighborhood center, a shopping center with a scale of service 5.000 to 40.000 people with an area of 2.700 to 9.000 m 2 .  Community center, a shopping center with a scale of service 40.000 to 150.000 people with an area of 9.000 to 25.000m 2 .  Regional center, a shopping center with a scale of service 150.000 to 400.000 people with an area of 25.000 to 90.000m 2 .  Office categories  Open plan offices, an office without any separator walls or partitions  Closed plan offices, an office with separator or partitions for every room  Road hierarchy  Primary arterial road, a road that connects a residential environment.  Primary collector road, a connecting road between a city-scale activity centers.  Secondary arterial road, roads that connect activities between primary collector roads.  Secondary collector road, a road that connects activities between secondary arterial roads.  Primery local road, a road that connects local activities and is an uninterrupted road despite entering a residential area.  Secondary local road, roads for local needs.  Principles of plot distribution  Orientation, most Surabaya developers will choose the orientation north, south, east and avoid the west.  Shape and area of plots, standard plots are generally square and rectangular.
While the area of the plot is influenced by the width of the road, the wider the road the wider the plot is determined.

b) Location
Location factors determine achievement to a property whether easy or difficult to achieve. Property that has a location in the city area can be easily reached and has a complete infrastructure. c) Accessibility and environment Cash property located in the (central business district) (CBD) area, has a high value because the cost of accessibility allows the property as a commercial property.

d) Utilities
A consideration in the provision of adequate urban utilities with good conditions, including the provision of electricity, telephone and water lines e) Size and shape This factor greatly affects the physical form of property that can determine the value of the property 3. Financially profitable (financially feasible) a) Cash flow  Payback period, a method used to determine the time period for returning money invested in investments [4]. (1)  Discounted payback period, a method used to determine the period of time needed to repay investments that have been made through discounted future cash inflows [4]. (2) Information: i = discounted rate n = year of cash entry period A = last year with discounted cumulative cash flow (-) B = value of discounted cash flow at the end of period A C = discounted cash flow during the period after A  Net present value (NPV), the method for ranking investment proposals that is equivalent to the present value of future net cash flows, which is discounted at capital costs [5]. If the NPV value is 0, then the investment made will not change the value of the company. = total initial investment T = invest rate  Internal rate of return (IRR), a method that calculates a discount rate that makes the present value of all estimated cash inflows equal to the present value of expected cash outflows [6]. The IRR results obtained are greater than the interest rate so the investment made produces a return that is greater than expected.
Information: FCFt = the annual free cash flow generated by the project Io = present value of investment costs after tax IRR = internal rate of return t = time period  Profitability index (PI), the present value ratio of future free cash flows to initial expenditures [7].
4. Maximum productivity Where the use of HBU analysis will produce the highest residual value of a land and consistent with the guaranteed rate of return for the market [2].

Research Methodology
This research uses quantitative descriptive method by conducting data collection techniques and observing carefully certain aspects related to the problem under study. The data used in this analysis are primary and secondary. The primary data is obtained from interviews and direct observations and secondary data is obtained from data collection and applicable regulations as shown in Table 1.

General Description of Research Object
The object of this research is a residential project that will be built on an area of 7.123 m 2 and is located at Dharma Husada Indah Barat III, Surabaya.

Legal Aspects
In zoning, the Surabaya C-Map shows the land location as a public facility but has been changed into a residential zone with some boundaries and conditions listed in Table 2.  Table 3 shows the site condition based on 9 parameters obtained by site survey. Score 1 for very bad conditions, 2 for bad conditions, 3 for moderate conditions, 4 for good conditions, and 5 for very good conditions.

Financial Aspects
Financial analysis is one of the four aspects assessed in highest and best use assessment after feasibility analysis on the legal aspect and physical aspect. The financial aspect will use the capital budgeting method with several methods, there are NPV, IRR, payback period, and discounted payback period of cash flow.

Maximum Productivity
After the two alternatives have been tested on the legal aspect, physical aspect, and financial aspect, the next step is to calculate the highest value through the maximum productivity test. the land value of the two alternatives will be compared to the value of the vacant land before developed to find which alternatives have the highest increase in land value (Table 8).

Results and Discussion
After the three aspects of HBU fulfilled in Table 9, legal aspects, physical aspects, and financial aspects. Therefore the maximum productivity in HBU aspect which produces the highest land value is the 1 st scenario which is an apartment with office building. This is because from the legal aspect, RTRW has already appropriate to its allotment which is for residential area according to City Planning Certificate (SKRK) and Surabaya Mayor Regulation of 2017 number 52. From physical aspect, site planning in the 1 st scenario has considered the size and shape of the property that determines the concept, road hierarchy, road pattern, and plot arrangement. Based on the financial aspect, the 2 nd scenario has a bigger IRR which is 128% and the 1 st scenario is 99%, but 1 st scenario has a bigger NPV which is Rp 563.448.604.512,12 and the 2 nd scenario is Rp.476.999.599.751,17. Therefore, the decisions of investment will be taken based on the NPV, and it is the 1 st scenario.

Suggestions
a. It is expected that in the next study to do research of market taste in every alternative before making a sale plan. b. It is expected that in the next research to add another scenarios that are possible for this site plan without changing the main function of the building according to applicable regulations.