Is there Value in Waiting? An Empirical Study of Real Options
Application to Australian Property Developments
A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy
Kwabena Mintah
MSc Real Estate Economics –Aalto University, Finland
BSc Land Economy- Kwame Nkrumah University of Science and Technology, Ghana
School of Property, Construction and Project Management
College of Design and Social Context
RMIT University
January, 2019
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Declaration
I certify that except where due acknowledgement has been made, the work is that of the
author alone; the work has not been submitted previously, in whole or in part, to qualify for
any other academic award; the content of the thesis is the result of work which has been
carried out since the official commencement date of the approved research program; any
editorial work, paid or unpaid, carried out by a third party is acknowledged; and ethics
procedures and guidelines have been followed.
I acknowledge the support I have received for my research through the provision of an
Australian Government Research Training Program Scholarship.
Kwabena Mintah
29th January 2019.
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Dedication
I dedicate this dissertation to my mother, Grace Mensah and my two Aunties, Akosua Tiwaa,
Abena Konadu of blessed memory and my dear wife, Betty Norah Agyemang. How I wish…
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Acknowledgements
First and foremost, my profound gratitude goes to all my supervisors, especially, Professor
David Higgins, formerly of RMIT University and now at Birmingham City University for
assuming the role of primary supervisor for this dissertation for two years. David has been
pivotal in completing this dissertation even as an external supervisor, particularly, comments
and feedback for improving the dissertation, suggesting possible interview participants for
its second phase and research training. I am forever grateful to you for your contribution and
motivation during this journey.
I am also grateful to Professor Ronald Wakefield who was an associate supervisor, and later
became my primary supervisor, for the constructive criticisms and suggestions to improve
the dissertation. Your contribution in terms liaising with industry partners for the semi-
structured interviews was instrumental. You provided insightful and thought-provoking
comments to ensure that the dissertation is devoid of ambiguity. Sir, your support and
contribution towards its completion is greatly appreciated.
I also owe a special gratitude to Dr Judith Callanan for her role as a co-supervisor in shaping
this dissertation. Judith read every Chapter, the complete draft and provided very valuable
and insightful comments to improve its practical relevance. She also liaised with industry
partners to access data on the selected case studies used in this dissertation. Beyond research
supervision, Judith has nurtured my passion for teaching and given me numerous
opportunities to develop my teaching and research skills. Truly, I am forever grateful to you.
The nature of research is such that the views of practitioners are always invaluable to validate
findings. As a result, my gratitude also goes to the numerous property practitioners in the
Australian property industry who contributed in diverse ways including practitioners from
Frasers Property, Oliver Hume Property, Ernst & Young, Knight Frank, JLL, Pointier
Advisory, ISPT, Herron Todd White, CBUS Property, Mirvac and CBRE. All other
contributors from various organisations whose names are not mentioned are also
acknowledged.
I am truly grateful to RMIT University for the research scholarship and technical training
that has aided me in undertaking my doctoral studies. The support of my PhD colleagues
and staff of the School of Property, Construction and Project Management of RMIT
University is greatly appreciated.
To my dearest wife, Betty Norah Agyemang and all family members (especially Akosua
Tiwaa and Osei Kuffour), I appreciate your support, love, encouragement and patience
during this incredible journey.
Finally, to everyone who contributed in any way towards my successful completion of this
dissertation, I appreciate your support.
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Table of Contents
Declaration ii
Dedication iii
Acknowledgements iv
List of Figures xii
List of Tables xiv
List of Publications xvi
Abbreviations xvii
Abstract 1
Introduction 4
1.1 Background to the Dissertation 4
1.2 Problem Statement 8
1.3 Scope of the Dissertation 10
1.4 Research Questions 12
1.5 Objectives of the Dissertation 12
1.6 Research Framework 15
1.7 Limitations of the Dissertation 17
1.8 Dissertation Outline 18
Literature Review 21
2.1 Introduction 21
2.2 Property Development 22
Definition of Property Development 22
Property Development Process 24
Stages of Property Development 29
2.3 Property Market 40
Space Market 40
Asset Market 41
DiPasquale and Wheaton’s Model 41
Real Estate System 43
2.4 Risks and Uncertainty in Property Development 45
Definition of Risk and Uncertainty 45
Sources of Risk and Uncertainty in Property Development 47
Dealing with Risks in Property Development 49
2.5 Property Valuation 52
