| A high degree of uncertainty makes real estate developers to turn their attention to amore reasonable real estate development decision-making and a more scientific theory ofinvestment. Introducing real options into real estate can be used to allow developers toreact accordingly based on the uncertainty of the future, which is of great significance.Based on the Quigg’s real option model framework, we started form the fixed-costreal estate development activities to explore the real option model that can be applied toreal estate development, then we made a detailed analysis of the real option model ofQuigg’s variable costs model. We deeply analyzed the optimal development density underdifferent target selection, by maximizing the value of the option value, we obtained theoptimal development construction scale while Quigg got the optimal density bymaximizing the option value after the strike and the development, our option value washigher than Quigg’s.Combined with Quigg’s mode and the optimal development density which isobtained by maximizing the option value, we took a deep sight to the parameters in thereal option model, control variate method was used to investigate the impact of the variousparameters on the results of the model. According to this investigation, we set somereasonable range of changes for some parameters.According to the analysis of the model parameters and some reasonable ranges, wediscussed the estimations of the model parameters, we showed the estimation method ofthe land lease rate and the cost elasticity of scale, and we also estimated the price of thebuildings to be developed by using Hedonic model empirically, which is a good examplefor the statistical model applied to the real options.This paper studied the available models and possible methods of analysis fordecision-making option value of the real estate development projects, which wouldmake it more scientific for the real estate investment and development decision-making,that has a certain practical significance. |
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