Download or read book Demand Uncertainty, Timing of Development and Leasehold Land Valuation written by Hui Yao and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper develops and tests a long-dated American call option pricing model for valuing development land under leasehold. We analyze and test option values in ten detailed Hong Kong cases involving purchase, holding, converting and developing land. We test also for optimal exercise of long-dated American calls using processes based on the optimal trigger ratio feature of the perpetual American call option model. Generally, the empirical results confirm presence of a positive and non-trivial option premium (mean 5.274%) in the cases, and that developers appear to delay exercise to the point predicted by the real options model.