Real options in real estate

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

The ownership of real estate comes with different types of flexibility. Land development, for instance, can be postponed, the use of a building can be changed, rents can be adjusted, and lease contracts can be extended or terminated. This chapters provides an introduction into real option models that consider these different types of flexibility. The models are introduced in a simple discrete time framework. The presentation places economic intuition at its centre. This is followed by a more technical discussion of continuous time models. Equipped with an understanding of these models, the chapter discusses studies that test real option models with data from real estate applications.
Original languageEnglish
Title of host publicationRoutledge Comapnion to Real Estate Investment
EditorsBryan D. MacGregor, Rainer Schulz, Richard K. Green
Place of PublicationLondon and New York
PublisherRoutledge
Chapter12
Pages232-250
Number of pages19
ISBN (Print)9781138020788
Publication statusPublished - 27 Nov 2018

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  • Cite this

    MacGregor, B. D., Schulz, R., & Sing, T. F. (2018). Real options in real estate. In B. D. MacGregor, R. Schulz, & R. K. Green (Eds.), Routledge Comapnion to Real Estate Investment (pp. 232-250). Routledge.