Uncertainty, flexibility, valuation and design: How 21st century information and knowledge can improve 21st century urban development – part i of ii

Pacific Rim Property Research Journal

Volumn 18, Issue 3, 2012, Pages 231-249

  Geltner, David ^a   Neufville, R D ^a  

^a MASSACHUSETTS INSTITUTE OF TECHNOLOGY   (United States)

Author keywords

Design; Development; Digital; Real options; Songdo New City; Uncertainty

Indexed keywords

EID: 84888382503     PISSN: 14445921     EISSN: None     Source Type: Journal    
DOI: 10.1080/14445921.2012.11104361     Document Type: Article

References (47)

1. Black, F and Scholes, M 1973, ‘The pricing of options and corporate liabilities’, Journal of Political Economy, 81, pp. 637-659
2. Bulan, L, Mayer, C and Somerville, CT 2009, ‘Irreversible investment, real options, and competition: evidence from real estate development’, Journal of Urban Economics, 65(3), pp. 237-251
3. Capozza, D and Helsley, R 1989, ‘The fundamentals of land prices and urban growth’, Journal of Urban Economics, 26, pp. 295-306
4. Capozza, D and Li, Y 1994, ‘The intensity and timing of investment: the case of land’, American Economic Review, 84(1), pp. 889-904
5. Case, K and Shiller, R 1987, ‘Prices of single family homes since 1970: new indexes for four cities’, New England Economic Review, September/October, pp. 45-56
6. Chiara, N, Garvin, M and Vecer, J 2007, ‘Valuing simple multiple-exercise real options in infrastructure projects’, Journal of Infrastructure Systems, (ASCE), June, pp.97-103
7. Clapp, JM and Lindenthal, T 2009, Option value created and destroyed by the big bang in the Berlin housing market 1978-2007, accessed November 19, 2009, available at SSRN: http://ssrn.com/abstract=1537397
8. Cox, J and Ross, S 1979, ‘Option pricing: a simplified approach’, Journal of Financial Economics, 7(3), pp. 229-263
9. Crosby, N, Lavers, A and Murdoch, J 1998, ‘Property valuation variation and the ‘margin of error’ in the UK’, Journal of Property Research, 15(4), pp. 305-330
10. Cunningham, CR 2006, ‘House price uncertainty, timing of development, and vacant land prices: evidence for real options in Seattle’, Journal of Urban Economics, 59(1), pp. 1-31
11. Cunningham, CR 2007, ‘Growth controls, real options, and land development’, Review of Economics and Statistics, 89(2), pp. 343-358
12. de Neufville, R, Scholtes, S and Wang, T 2006, ‘Valuing options by spread sheet: parking garage case example’, ASCE Journal of Infrastructure Systems, 12(2), pp. 107-111
13. de Neufville, R and Scholtes, S 2011, Flexibility in Engineering Design, MIT Press, Cambridge
14. Diaz, J and Wolverton, M 1998, ‘A longitudinal examination of the appraisal smoothing hypothesis’, Real Estate Economics, 26(2)
15. Dixit, A and Pindyck, R 1994, Investment under uncertainty, Princeton University Press, Princeton Economist Intelligence Unit 2011, Building Rome in a Day: The Sustainability of China’s Housing Boom, The Economist Intelligence Unit Ltd, London
16. Eichholtz, P and Geltner, D 2002, Four centuries of location value: implications for real estate capital gain in central places, MIT Center for Real Estate Working Paper (as also reported in Chapter 5 of Geltner, D et al Commercial real estate analysis and investments, SouthWestern College Publishing Co, Cincinnati).
17. Fisher, J, Geltner, D and Pollakowski, H 2007, ‘A quarterly transactions-based index (TBI) of institutional real estate investment performance and movements in supply and demand’, Journal of Real Estate Finance and Economics, 34(1)
18. Geltner, D, MacGregor, B and Schwann, G 2003, ‘Appraisal smoothing and price discovery in real estate markets’, Urban Studies
19. Geltner, D, Miller, N, Clayton, J and Eichholtz, P 2007, Commercial real estate analysis and investments, South-Western College Publishing Co, Cincinnati
20. Grenadier, S 1995a, ‘The persistence of real estate cycles’, Journal of Real Estate Finance and Economics, 10, pp. 95-119
21. Grenadier, S 1995b, ‘Valuing lease contracts: a real options approach’, Journal of Financial Economics, 38(3), pp. 297-331
22. Grenadier, S 1995c, ‘Flexibility and tenant mix in real estate projects’, Journal of Urban Economics, 38(3), pp. 357-378
23. Grenadier, S 1996, ‘The strategic exercise of options: development cascades and overbuilding in real estate markets’, Journal of Finance, 51(5), pp. 1653-1679
24. Grenadier, S 2005, ‘An equilibrium analysis of real estate leases’, Journal of Business, 78(4), pp. 1173-1213
25. Guma, A, Pearson, J, Wittels, K, de Neufville, R and Geltner, D 2009, ‘Vertical phasing as a corporate real estate strategy and development option’, Journal of Corporate Real Estate, 11(3), pp. 144-157
26. Hoesli, M, Jani, E and Bender, A 2006, ‘Monte Carlo simulations for real estate valuation’, Journal of Property Investment and Finance, 24(2), pp. 102-122
27. Lin, J, de Weck, O, de Neufville, R and Yue, H 2011, ‘Enhancing the value of oilfield developments with flexible subsea tieback’, Journal of Petroleum Science and Engineering (in review)
28. Kang, J 2004, ‘Valuing flexibilities in large-scale real estate development projects’, unpublished MSRED Thesis, MIT Center for Real Estate
29. Lee, J and Oh, J 2008, ‘New Songdo City and the value of flexibility: a case study of implementation and analysis of a mega-scale project’, unpublished MSRED Thesis, MIT Center for Real Estate
30. Luenberger, D 1998, Investment science, Oxford University Press, New York
31. Macomber, J 2011, ‘The role of finance and private investment in developing sustainable cities’, Journal of Applied Corporate Finance, 23(3), pp. 64-75
32. Masunaga, S 2007, ‘ Comparative study of real options valuation methods: economics-based approach vs. engineering-based approach’, unpublished MSRED Thesis, MIT Center for Real Estate
33. McDonald, R and Siegel, D 1986, ‘The value of waiting to invest’, Quarterly Journal of Economics, 101, pp. 707-728
34. Merton, RC 1973, ‘The theory of rational option pricing’, Bell Journal of Economics and Management Science, 4, pp. 141-183
35. Myers, SD 1977, ‘Determinants of corporate borrowing’, Journal of Financial Economics, 5(2), pp. 147-175
36. Newell, G. and Peng, H 2008, ‘The role of U.S. infrastructure in investment portfolios’, Journal of Real Estate Portfolio Management, 14(1), pp. 21-32
37. Newell, G, Chau, K and Wong, S 2009, ‘The significance and performance of infrastructure in China’, Journal of Property Investment and Finance, 27(2), pp. 180-202
38. Quigg, L 1993, ‘Empirical testing of real option-pricing models’, Journal of Finance, 48(2), pp. 621-640
39. Rose, S 1998, ‘Valuation of interacting real options in a toll road infrastructure project’, Quarterly Review of Economics and Finance, 38, pp. 711-723
40. Rothballer, C and Kaserer, C 2011, Is infrastructure really low risk? an empirical analysis of listed infrastructure firms, Working Paper, Technische Universitat Munchen
41. Samuelson, P 1965, ‘Rational theory of warrant pricing’, Industrial Management Review, 6, pp. 41-50
42. Schwartz, E and Torous, W 2007, ‘Commercial office space: testing the implications of real options models with competitive interactions’, Real Estate Economics, 35(1), pp. 1-20
43. Smit, HTJ and Trigeorgis, L 2009, ‘Valuing infrastructure investment: an option games approach’, California Management Review, 51(2), pp. 79-100
44. Titman, S 1985, ‘Urban land prices under uncertainty’, American Economic Review, 75(3), pp. 505-514
45. Trigeorgis, L 2002, Real options: managerial flexibility and strategy in resource allocation, MIT Press, Cambridge
46. Wang, T and de Neufville, R 2006, Identification of real options “in ” projects, Proceedings, INCOSE International Symposium, Orlando, July
47. Williams, J 1991, ‘Real estate development as an option’, Journal of Real Estate Finance and Economics, 4(2), pp. 191-209