2005•Journal of Zhengzhou Institute of Aeronautical Industry ManagementRequires access

The Real Option Theory in Real Estate Investment Decision

Yang Ruo-jing

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Abstract

Contrasting with traditional investment decision method,the real option which considers the value of time and management flexibility in the process of investment is more scientific and rational.On the basis of clarifying the value forming of real option and analyzing optional characteristic of real estate investment decision,the paper evaluates the value of waiting option in real estate investment and illustrates its application in practice through a case analyzing.

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Contrasting with traditional investment decision method,the real option which considers the value of time and management flexibility in the process of investment is more scientific and rational.On the basis of clarifying the value forming of real option and analyzing optional characteristic of real estate investment decision,the paper evaluates the value of waiting option in real estate investment and illustrates its application in practice through a case analyzing.

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Available abstract

Contrasting with traditional investment decision method,the real option which considers the value of time and management flexibility in the process of investment is more scientific and rational.On the basis of clarifying the value forming of real option and analyzing optional characteristic of real estate investment decision,the paper evaluates the value of waiting option in real estate investment and illustrates its application in practice through a case analyzing.

Key concepts: Real estate, Investment (military), Flexibility (engineering), Option value, Value (mathematics), Cost approach, Capitalization rate, Investment decisions

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