Building land and the urban land development process : characteristics, rights and markets
Groetelaers, Danielle
Building land is a very durable product, but in The Netherlands it is also a very scarce product. The option to acquire potential building land plays a very important role in urban land development. An option can be defined as the right without obligation to obtain something of value upon the payment or giving up something else of value. Options, whose underlying assets are real assets, are referred to as Real Options. The application of real option theory specific to real estate may be termed the call option model of land value. In this model land is viewed as obtaining its value through the option it gives its owner to develop a structure on the land, or to demolish and/or redevelop existing structures. The characteristics of building land together with the right to develop structures on it see to it that land becomes a very valuable commercial product. The urban land development process in the Netherlands was traditionally in control of local authorities, but in the past two decades the real estate market and the urban land development process have changed considerably. Important factors in those changes and in the political debate are the product landd, the characteristics of land, and changing relations on the land market. This paper focuses on the question why these factors play such an important role in urban land development and whether this is an opportunity or a threat to land development.
Event: XXIII International FIG Congress : Shaping the change
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