The recovery of brownfield sites has been in the past, and still is today, at the centre of urban policies which have established and, in some cases, completed key urban transformation projects. In this regard, it should be noted that a preliminary remediation is often required for large transformation areas before urban functions can be established. Among other things, the recovery of these areas represents a matter of public interest in connection with environmental protection and public health goals. Investment decisions in relation to the development of brownfields are affected, primarily, by two critical variables: the remediation costs and market value of the area after the environmental recovery has been completed. This is in fact a complex process, which cannot be estimated with certainty, and which is influenced by a large number of variables. These include, for example, the characteristics of the project, the timing, the technology and the level of uncertainty in achieving the urban revitalization goals. In the past and in many countries, the use of public resources was the preferred means of encouraging the development of urban transformation projects of contaminated lands. On the contrary, the current economic scenario requires a new insight. One possibility would be to involve private developers from the early stages of the transformation. In this regard, given the uncertainty surrounding the remediation costs, some studies have aimed to define the financial and economic feasibility of the recovery of brownfields through the Real Options Theory (ROT). In this light, this study attempts to argue and support the application of the ROT. It focuses on a contaminated area intended for transformation from an industrial to a residential and commercial use, but for which remediation costs are unavoidable, although their impact is low. By changing the future scenarios, the application of the Black & Scholes formula compares and makes evident the points of view of the landowner, the real estate developer, and the public sector.

Methodology for the Evaluation of Real Options in Real Estate Development in Areas Characterized by Uncertain Scenarios / Bravi, Marina; Rossi, Stefano; Talarico, Antonio. - ELETTRONICO. - (2013). (Intervento presentato al convegno European Real Estate Society 20th Annual Conference. tenutosi a Vien nel 3rd-6th July 2013).

Methodology for the Evaluation of Real Options in Real Estate Development in Areas Characterized by Uncertain Scenarios.

BRAVI, MARINA;ROSSI, STEFANO;TALARICO, ANTONIO
2013

Abstract

The recovery of brownfield sites has been in the past, and still is today, at the centre of urban policies which have established and, in some cases, completed key urban transformation projects. In this regard, it should be noted that a preliminary remediation is often required for large transformation areas before urban functions can be established. Among other things, the recovery of these areas represents a matter of public interest in connection with environmental protection and public health goals. Investment decisions in relation to the development of brownfields are affected, primarily, by two critical variables: the remediation costs and market value of the area after the environmental recovery has been completed. This is in fact a complex process, which cannot be estimated with certainty, and which is influenced by a large number of variables. These include, for example, the characteristics of the project, the timing, the technology and the level of uncertainty in achieving the urban revitalization goals. In the past and in many countries, the use of public resources was the preferred means of encouraging the development of urban transformation projects of contaminated lands. On the contrary, the current economic scenario requires a new insight. One possibility would be to involve private developers from the early stages of the transformation. In this regard, given the uncertainty surrounding the remediation costs, some studies have aimed to define the financial and economic feasibility of the recovery of brownfields through the Real Options Theory (ROT). In this light, this study attempts to argue and support the application of the ROT. It focuses on a contaminated area intended for transformation from an industrial to a residential and commercial use, but for which remediation costs are unavoidable, although their impact is low. By changing the future scenarios, the application of the Black & Scholes formula compares and makes evident the points of view of the landowner, the real estate developer, and the public sector.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11583/2507832
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