Market Uncertainty, Timing of Development, and Vacant Land: Evidence for Real Options in 35 Large and Medium-Sized Cities in China

Lian Fa Ruan; Wei Yan

doi:10.4028/www.scientific.net/AMM.584-586.2301

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Study on the Management Performance Evaluation Model of Water Conservancy Agent Construction Project Based on Maturity and SCP Model
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Extending the Life Cycle of Buildings Using Project and Facility Managements
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Improve Responsibility Cost Management Level of Construction Enterprise by Information System
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Market Uncertainty, Timing of Development, and Vacant Land: Evidence for Real Options in 35 Large and Medium-Sized Cities in China
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Discussion on Core Elements in Engineering Project Management
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Portfolio Project Management System Architecture for a Large Corporation with Divisional Management Structure
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Project Management for the Construction of a Large Scale Modified UNITANK Wastewater Treatment Plant
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Research on Problems and Improvement Strategies of Government Investment Project Management
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Market Uncertainty, Timing of Development, and Vacant Land: Evidence for Real Options in 35 Large and Medium-Sized Cities in China

Abstract:

This paper explains the phenomenon of vacant land from the perspective of developers’ choosing the timing of project development. We tested the key hypothesis of real options by building a panel data model, using the commercial housing project development data of 35 large and medium-sized cities. The results show that one standard deviation increased in the house price uncertainty reduces the new construction of project by 4.08%. The results verify the key hypothesis of real options and also indicate that Chinese real estate developers’ investment decisions are consistent with the theory of real options. The developers delay the timing of developing vacant land because they notice the values of “waiting”.