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Paper eres2012_368:
Profit allocation in urban renewal: A real options approach

id eres2012_368
authors Oliver Shyr and Chen-Fu Wang
year 2012
title Profit allocation in urban renewal: A real options approach
source 19th Annual European Real Estate Society Conference in Edinburgh, Scotland
summary Urban renewal practices in Taiwan have been criticized for its contribution to urban gentrification and rising housing prices that deteriorates housing affordability. On the other hand, disputes regarding the allocation of profits among landowners and developers may often delay or jeopardize the progress of these renewal projects. The disputes are usually resulted from two reasons: 1) the uncertainty of future housing market performance; and 2) landowners’ lack of information on housing markets. The aim of our study is to apply real option to estimate the both the option values and intrinsic values of parcels in Taipei by taking into account the demolition costs and restrictions associated with urban renewal in Taiwan. In the case study we found that landowners would disapprove urban renewal proposals or delay the renewal process if the option premium is much higher than the average market premium. This explains why landowners of the prime real estate locations are often reluctant to approve urban renewal proposals and developer would have to postpone the development project during the period when the housing market is prosperous.
series ERES:conference
type normal paper
content file.pptx (902,458 bytes)
discussion No discussions. Post discussion ...
session Parallel Session A9
last changed 2014/10/21 21:51
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