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Development Valuation: Impacts Of Uncertainty, Risk And Capital Structure

Author

Listed:
  • Terry Grissom
  • James Berry
  • Jim Berry
  • Jasmine Lim

Abstract

This paper builds on the developing literature delineating and specifying uncertainty and risk as it can be associated with measures of entrepreneurial profit in development valuation procedure. These conceptual and empirical associations enable the formulation of strategic differencing in systematic pricing of both uncertainty and risk. The incorporation of stochastic pricing procedure on development valuation in turn alters the fundamental choices of diversifiable development options, alternative capital structures and financing procedures fitting development scenarios and strategy. The strategic model created in this paper is tested with the utilization of data from development appraisal/valuation reports conducted from a significantly defined set of opportunity sites. The quantitative data derived from alternative development scenarios proposed across Belfast, Northern Ireland and the Republic of Ireland enable a comparative analysis of the potential and measurement of risk and uncertainty associated with the entrepreneurial choice between options of single and mixed use development alternatives.

Suggested Citation

  • Terry Grissom & James Berry & Jim Berry & Jasmine Lim, 2010. "Development Valuation: Impacts Of Uncertainty, Risk And Capital Structure," ERES eres2010_169, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2010_169
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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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