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Article: What Motivates a Developer to Sell before Completion?
Title | What Motivates a Developer to Sell before Completion? |
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Authors | |
Keywords | Hedge real estate risk Housing Presale Regulation |
Issue Date | 2019 |
Publisher | Springer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0895-5638 |
Citation | Journal of Real Estate Finance and Economics, 2019, v. 59 n. 2, p. 209-232 How to Cite? |
Abstract | Presale, or selling before completion, is a very common phenomenon in the housing market. However, not all developers presell their units and the proportion of units presold varies over time and across projects. This study examines the factors that affect developers’ decisions to presell their units. Based on housing transaction records on over 1000 projects in Hong Kong, we found that presale has been used as a tool to hedge against future price fluctuations. Developers’ decisions to presell also depend on its effectiveness as a hedging tool, which increases with the size of the development portfolio held by a developer. When the flexibility of a presale is constrained by regulations, its effectiveness declines, thus giving a developer less incentive to presell. Contrary to industry wisdom, presale is not an important source of financing, at least for listed developers in Hong Kong. |
Persistent Identifier | http://hdl.handle.net/10722/263398 |
ISSN | 2023 Impact Factor: 1.7 2023 SCImago Journal Rankings: 0.580 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | LI, L | - |
dc.date.accessioned | 2018-10-22T07:38:16Z | - |
dc.date.available | 2018-10-22T07:38:16Z | - |
dc.date.issued | 2019 | - |
dc.identifier.citation | Journal of Real Estate Finance and Economics, 2019, v. 59 n. 2, p. 209-232 | - |
dc.identifier.issn | 0895-5638 | - |
dc.identifier.uri | http://hdl.handle.net/10722/263398 | - |
dc.description.abstract | Presale, or selling before completion, is a very common phenomenon in the housing market. However, not all developers presell their units and the proportion of units presold varies over time and across projects. This study examines the factors that affect developers’ decisions to presell their units. Based on housing transaction records on over 1000 projects in Hong Kong, we found that presale has been used as a tool to hedge against future price fluctuations. Developers’ decisions to presell also depend on its effectiveness as a hedging tool, which increases with the size of the development portfolio held by a developer. When the flexibility of a presale is constrained by regulations, its effectiveness declines, thus giving a developer less incentive to presell. Contrary to industry wisdom, presale is not an important source of financing, at least for listed developers in Hong Kong. | - |
dc.language | eng | - |
dc.publisher | Springer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0895-5638 | - |
dc.relation.ispartof | Journal of Real Estate Finance and Economics | - |
dc.rights | The final publication is available at Springer via http://dx.doi.org/10.1007/s11146-018-9662-3 | - |
dc.rights | This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. | - |
dc.subject | Hedge real estate risk | - |
dc.subject | Housing | - |
dc.subject | Presale | - |
dc.subject | Regulation | - |
dc.title | What Motivates a Developer to Sell before Completion? | - |
dc.type | Article | - |
dc.description.nature | published_or_final_version | - |
dc.identifier.doi | 10.1007/s11146-018-9662-3 | - |
dc.identifier.scopus | eid_2-s2.0-85048057154 | - |
dc.identifier.hkuros | 295470 | - |
dc.identifier.volume | 59 | - |
dc.identifier.issue | 2 | - |
dc.identifier.spage | 209 | - |
dc.identifier.epage | 232 | - |
dc.identifier.isi | WOS:000477053500004 | - |
dc.publisher.place | United States | - |
dc.identifier.issnl | 0895-5638 | - |