REAL OPTIONS IN INVESTING IN REAL ESTATE

Milcho Bliznakov ()

INTERNATIONAL SCIENTIFIC AND PRACTICAL CONFERENCE "CONSTRUCTION ENTREPRENEURSHIP AND REAL PROPERTY", 2019, issue 1, 164-170

Abstract: The paper compares different approaches to assessing real options (abandon options) when investing in residential property. The value of the investment is determined by capitalizing on rents at a constant rate of growth model Gordon.The risk-neutral probability approache, and the Datar-Mathews method are applied to real estate market data and compared. The results obtained when evaluating the abandon option are comparable. Availability of real options increases the value of the investment.

Keywords: Investments; Monte-Carlo simulation; Portfolio reproduction; Real Options; Risk neutral probabilities (search for similar items in EconPapers)
JEL-codes: G31 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:vrn:emccon:y:2019:i:1:p:164-170

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