Optimal Phasing and Inventory Decisions for Large-Scale Residential Development Projects

Ott, Steven H.; Hughen, W. Keener; Read, Dustin C.

doi:10.1007/s11146-011-9299-y

Cited by 17 publications

(10 citation statements)

References 33 publications

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“…Also, the real estate market can be divided into land and building parts, both of which are efficient to be considered as real options in terms of price irreversibility and Continuity [18]. In this Context, many related studies have been published, such as on investor competition and investment timing [19][20][21][22][23], factors affecting real estate cycles [24,25], and decisions in social overhead capital projects [26], which confirm the usefulness of real options in terms of real estate development and urban planning.…”

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confidence: 77%

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Detecting Possible Reduction of the Housing Bubble in Korea for Different Residential Types and Regions

Kim

Song

2020

Sustainability

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The objective of this paper is to detect the arbitrage opportunity and to manage the bubbles in the Korean real estate market based on a binomial American option pricing model with heteroscedasticity. The limitation of previous research where the real options framework was first introduced is its macro-economic implication based on the utilization of the general housing indices. Therefore, in this paper, we extensively apply the model to different residential types and regions. The results suggest that the model can detect the realistic and reasonable trend of housing bubbles and the arbitrage opportunities for different times, residential types, and regions. We also simulate two scenarios to encourage the trades of real estate assets: promotion of early exercise, and the shortened Contract period. Performing arbitrage trading based on these two methods, we discover that both approaches effectively reduce the housing bubbles in all residential types and regions. Specifically, the promotion of early exercise reduces the housing bubble more effectively than the shortened Contract period. Hence, we advocate the utilization of the information obtained from the model to boost the transactions in the Korean real estate market in order to reduce the bubble-related risks and to support sustainable economic growth.

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confidence: 77%

“…Meanwhile, the spread is the largest in all residential types during the global financial crisis with the highest IR, and the spread steadily decreased after the global financial crisis. (25), 109 (20), respectively. All residential types exhibit a higher HPI than JDI, where the JDI is roughly 40% to 60% of the HPI.…”

Section: Indices and Spreadsmentioning

confidence: 99%

Detecting Possible Reduction of the Housing Bubble in Korea for Different Residential Types and Regions

Kim

Song

2020

Sustainability

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“…Large-scale land development can be categorised into five forms: large-scale infrastructure [67,68], industrial estates [69][70][71], large-scale agricultural investment [72,73], large-scale residential [74][75][76], and new towns [12,77,78]. The development of new towns is considered to be the most dynamic type of development [8], usually involving a substantial amount of land [50,79,80].…”

Section: New Towns As a Large-scale Land Developmentmentioning

confidence: 99%

“…In the modern era, the idea of a new town initially goes back to late-nineteenth-century Europe [16], while the concept became more common since the beginning of the twentieth century in the U.S. [8], then followed by Global South countries along with the upcoming of colonialism [81]. In the post-colonialism era, the new town grew for several reasons, such as natural resource exploitation [9], housing provision [74], and improvement of urban facilities [12,75]. In the case of Indonesia, the new town in the post-independence period emerged as an effort to provide new housing outside the core of Jakarta City [82].…”

Section: New Towns As a Large-scale Land Developmentmentioning

confidence: 99%

Transformation of Local People’s Property Rights Induced by New Town Development (Case Studies in Peri-Urban Areas in Indonesia)

Pratomo

Samsura

Krabben

2020

Land

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New town development as a form of large-scale development is not a new phenomenon, particularly in developing countries. This development mainly takes place in peri-urban areas due to the high pressure caused by the growing population and the lack of facilities and infrastructure in city centres. As an effect, local communities who originally occupied the land often lose their rights over the property their livelihood might have relied on. Property rights can be grouped differently, classified according to different bundles: appropriation, ownership, and formality of rights. This paper investigates to what extent new town development in Indonesia has affected the property rights of local communities, in terms of the transformation of rights and security level. Moreover, it examines to what extent this transformation has been affected by urbanisation pressure. Ample attention is paid to the transformation of various bundles of rights concerning different usage of property, both residential and cultivated land. A total of 252 questionnaires were distributed to three different locations of new towns in Indonesia. A before-after analysis was employed to identify the transformation of the property rights and their security level, followed by multiple linear regression analysis to observe the influence of the urbanisation pressure to the security level. The research reveals that the transformation of property rights of local residents mainly concerns the appropriation rights. The analysis also indicates that there is a tendency that the security level decreases. Statistically, this appears to be affected by urbanisation pressure variables: type of land, land use, and occupation. With this study, we offer on the one hand a conceptual framework for assessing property rights, while on the other hand, we provide empirical evidence regarding the effects of new town development on property rights transformation and its security level.

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“…Under such circumstances, a phased sequential investment strategy is superior to a parallel investment strategy (Childs et al, 1998;Kort et al, 2010). Ott et al (2012) constructs the phased development and sales decision-making model of large-scale residential development projects. As pointed out in Ott's study, full development, lumpy or smooth-phased developments can all be optimal in different market environments.…”

Section: Real Options For Phased Sequence Investmentmentioning

confidence: 99%

Timing Decisions of Housing Sales and Development Based on Real Option Theory

Zhang

Shi

Chang

et al. 2020

International Journal of Strategic Property Management

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Based on the real option theory, this paper studies the impact of uncertainty on the timing decisions required in housing development and sales. Data of newly-built houses and corresponding plots in Hangzhou, China, are used for empirical analysis. In order to better reflect the changes in market demand under frequent policy intervention, in addition to the usual price volatility, this paper introduces the volatility of trading volume to measure the uncertainty of China’s real estate market. The results show that the volatility of trading volume has a significant impact on timing decisions. Also, trading volume volatility can better reflect the characteristic of deferred option than can price volatility, especially during the sales phase. This study provides evidence to support Bar-Ilan and Strange’s (1998) research of sequential investment. Because of the existence of the second option, i.e., sales timing, the starts in the first stage are not too sensitive to uncertainty. In the case of the second option, the longer the construction period is, and the lower the cost of the first stage is, the higher will be the probability of triggering the start. In addition, the characteristics of market risk aversion are obvious in the study area, especially in the suburban area.

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Optimal Phasing and Inventory Decisions for Large-Scale Residential Development Projects

Cited by 17 publications

References 33 publications

Detecting Possible Reduction of the Housing Bubble in Korea for Different Residential Types and Regions

Detecting Possible Reduction of the Housing Bubble in Korea for Different Residential Types and Regions

Transformation of Local People’s Property Rights Induced by New Town Development (Case Studies in Peri-Urban Areas in Indonesia)

Timing Decisions of Housing Sales and Development Based on Real Option Theory

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