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Article: An option pricing approach to the valuation of real estate contaminated with hazardous materials

TitleAn option pricing approach to the valuation of real estate contaminated with hazardous materials
Authors
KeywordsHazardous Materials
Optimal Timing
Option Pricing
Issue Date1995
PublisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0895-5638
Citation
The Journal Of Real Estate Finance And Economics, 1995, v. 10 n. 2, p. 121-144 How to Cite?
AbstractThis paper uses option pricing to examine how the presence of hazardous materials affects real estate value. The property owner has two options. The first option is to remove the hazardous materials at the best time. The second option, embedded in the first one, is to redevelop the property at the best opportunity. The owner has three possible timing strategies with respect to the exercise of these two options: remove the hazardous materials first and retain the option to redevelop the property later, remove and redevelop at the same time, or do nothing. Conditions under which the presence of the hazardous materials may either expedite or postpone the decision to redevelop are also derived. If the regulatory environment does not allow the property owner to make optimal timing decisions with respect to the exercise of these options, then our results provide an indication of the cost of regulation as measured by the additional loss in property value. © 1995 Kluwer Academic Publishers.
Persistent Identifierhttp://hdl.handle.net/10722/177645
ISSN
2015 Impact Factor: 0.698
2015 SCImago Journal Rankings: 1.144
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorLentz, GHen_US
dc.contributor.authorTse, KSMen_US
dc.date.accessioned2012-12-19T09:39:25Z-
dc.date.available2012-12-19T09:39:25Z-
dc.date.issued1995en_US
dc.identifier.citationThe Journal Of Real Estate Finance And Economics, 1995, v. 10 n. 2, p. 121-144en_US
dc.identifier.issn0895-5638en_US
dc.identifier.urihttp://hdl.handle.net/10722/177645-
dc.description.abstractThis paper uses option pricing to examine how the presence of hazardous materials affects real estate value. The property owner has two options. The first option is to remove the hazardous materials at the best time. The second option, embedded in the first one, is to redevelop the property at the best opportunity. The owner has three possible timing strategies with respect to the exercise of these two options: remove the hazardous materials first and retain the option to redevelop the property later, remove and redevelop at the same time, or do nothing. Conditions under which the presence of the hazardous materials may either expedite or postpone the decision to redevelop are also derived. If the regulatory environment does not allow the property owner to make optimal timing decisions with respect to the exercise of these options, then our results provide an indication of the cost of regulation as measured by the additional loss in property value. © 1995 Kluwer Academic Publishers.en_US
dc.languageengen_US
dc.publisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0895-5638en_US
dc.relation.ispartofThe Journal of Real Estate Finance and Economicsen_US
dc.subjectHazardous Materialsen_US
dc.subjectOptimal Timingen_US
dc.subjectOption Pricingen_US
dc.titleAn option pricing approach to the valuation of real estate contaminated with hazardous materialsen_US
dc.typeArticleen_US
dc.identifier.emailTse, KSM: ktse@hku.hken_US
dc.identifier.authorityTse, KSM=rp01101en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1007/BF01096985en_US
dc.identifier.scopuseid_2-s2.0-0006060994en_US
dc.identifier.volume10en_US
dc.identifier.issue2en_US
dc.identifier.spage121en_US
dc.identifier.epage144en_US
dc.identifier.isiWOS:A1995QQ62000002-
dc.publisher.placeUnited Statesen_US
dc.identifier.scopusauthoridLentz, GH=7003643972en_US
dc.identifier.scopusauthoridTse, KSM=7103352647en_US

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