Presales, Financing Constraints, and Developers' Production Decisions

Su Chan, Fang Fang and Jing Yang

Journal of Real Estate Research, 2008, vol. 30, issue 3, 345-376

Abstract: This study explores the impacts a presale contract has on a developer’s pricing and production decisions in a gametheoretical framework. In an environment where developers have full capital market access, the findings reveal that both developers and buyers are indifferent between a presale and a spot sale method. However, in an environment with financing constraints, both developers and buyers are better off when a presale method is used. This is because the presale method solves the financing constraint by injecting equity into the development and, hence, reducing financing costs. This model prediction seems to describe well the real world situations seen in some of the property markets in Asia that have nascent financial systems.

Date: 2008
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10835547.2008.12091221 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:rjerxx:v:30:y:2008:i:3:p:345-376

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rjer20

DOI: 10.1080/10835547.2008.12091221

Access Statistics for this article

Journal of Real Estate Research is currently edited by William Hardin and Michael Seiler

More articles in Journal of Real Estate Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().