Development Value: A Real Options Approach Using Empirical Data
Posted: 10 Aug 2011
Date Written: August 9, 2011
This paper combines an empirical methodology and a theoretical options approach to determine the real option values of development and delay for vacant parcels of land in the City of Chicago. A theoretical options model provides an option price that incorporates future uncertainty. The data allow for disaggregation down to specific land use categories and results show option values vary across zoning categories and within zoning categories for specific land uses.
Keywords: Real options, Land value, Development
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