Han-suck Song - Academia.edu (original) (raw)
Papers by Han-suck Song
The purpose of this review article is to give a systematic overview of strategies to make home ow... more The purpose of this review article is to give a systematic overview of strategies to make home ownership affordable to more households. The strategies are divided into the four distinct time periods of a typical 'housing career': Down payment accumulation stage, transaction stage, ownership stage and selling stage. Research show that home ownership is the preferred choice of a majority of households. Although home ownership rates have been on the increase since World War II, there are recent signs in some large economies that this trend has been halted. It is argued that little is known on the effectiveness of a specific strategy and that a wide range of strategies are needed should the government wish to encourage home ownership. Moreover, considering the weak financial situation of most governments, direct subsidies and grants are probably not very interesting from a government perspective.
In many applications of real options there is an assumption of complete capital markets. For the ... more In many applications of real options there is an assumption of complete capital markets. For the perpetual optimal timing option this means that if the underlying asset (e.g. a developed project) does not pay out any cash flows, then there is no finite optimal time at which the investment should be undertaken. In contrast, when the markets are incomplete, there could be a possibility of a finite optimal stopping time. We discuss the incomplete case in detail, connect it with yields and "implied yields" and give several examples of incomplete market models where could be a finite optimal time to invest.
Journal of Sustainable Real Estate, 2013
ABSTRACT In order to further mitigate negative environmental impact, the European Union (EU) has ... more ABSTRACT In order to further mitigate negative environmental impact, the European Union (EU) has adopted the so called ‘‘20-20-20’’ goals, in which a (primary) energy reduction target is included. Subsequently, the Energy Performance Certificate (EPC) for buildings (via the Directive on the Energy Performance of Buildings) has been implemented in EU member states. In this paper, we examine the impact of EPCs on office revenues. By and large, we find that better EPC ratings have a positive and significant effect on revenues. This research area is important as improved energy efficiency in the built environment is necessary in order to reach the EU reduction target.
This paper develops a formula for pricing a residential option with respect to a tenant’s so call... more This paper develops a formula for pricing a residential option with respect to a tenant’s so called outside option. Two parameters are introduced: The tenant’s transaction cost of moving and moving ...
It is often argued that great energy savings can be accomplished by upgrading existing energy-ine... more It is often argued that great energy savings can be accomplished by upgrading existing energy-inefficient building stock. However, even if these investments are profitable at the time, it might be even better to postpone these measures as even better investments can be realized later on. Such behavior can be analyzed by applying the real options analysis (ROA) framework. In addition, the retrofit scenario differs from the new development case, as the former is affected by the value of the already existing building, since this value must be “surrendered” in order to acquire revenues from the retrofitted building. The main purpose of this paper is to evaluate green refurbishments using the real options methodology. In doing so, we are able to accurately estimate the “embedded” real option values of deferring green refurbishments, thereby adding to current explanations of the energy-efficiency gap. This paper also discusses policy suggestions to reduce the value of waiting and thus tri...
SN Business & Economics, 2021
Traditional models of irreversible investment problems assume that the investment starts generati... more Traditional models of irreversible investment problems assume that the investment starts generating cash flows immediately, i.e., at the same time as the investment is undertaken. Real-world investment situations are characterized by time-to-build or investment lags, which means that there is a time difference between when the investment is made and when the investment starts generating cash flows. We combine two existing models of investment lags to obtain a flexible, yet simple, way of modelling and analyzing the effects of investment lags. Both traditional models, and models that incorporate the effects of time-to-build, typically assume that the expected future cash flows generated by an investment are represented by a single cash flow that reflects the size of the market value of an investment. To reflect real-world cases where investments generate cash flows in several time periods, we present a framework in which cash flows are explicitly allowed to be spread out in time. Our...
FUZZY ECONOMIC REVIEW, 2018
In many applications of real options there is an assumption of complete capital markets. For the ... more In many applications of real options there is an assumption of complete capital markets. For the perpetual timing option this means that if the underlying asset does not pay out any cash flows, then there is no finite optimal time at which the investment should be undertaken. In contrast, when the market is incomplete there is a possibility of having a finite optimal stopping time even in the cases when the underlying asset does not pay out any cash flows. We discuss the incomplete case in models driven by both Brownian motion(s) and a Poisson process and connect it with the concept of an implied yield. The implied yield will in these models extend the concept of a monetary yield (i.e. a yield that represents the fraction of the value of an asset paid out as a cash flow). Several examples of incomplete market models where there could be a finite optimal time to invest are given.
Journal of European Real Estate Research, 2020
PurposeThis paper aims to analyze how nearby property prices are affected by new construction pro... more PurposeThis paper aims to analyze how nearby property prices are affected by new construction projects in Stockholm. If there is an impact on property prices, the authors endeavor to investigate whether the effects vary among different areas within the municipality, for different groups of inhabitants and for different types of housing (i.e. public versus private housing).Design/methodology/approachThe authors use a difference-in-difference specification in a hedonic model, and the sample consists of more than 90,000 observations over the period 2005-2013.FindingsThe results are robust and indicate that house prices in nearby areas increase following the completion of infill development. The results also indicate that infill development has a positive spillover effect on nearby dwelling prices only in areas with lower incomes, more public housing units and more inhabitants born abroad.Originality/valueIt provides an analysis on how nearby property prices are affected by new construc...
Journal of Retailing and Consumer Services, 2016
Earlier research points to negative effects on the risk-weighted return from using financial advi... more Earlier research points to negative effects on the risk-weighted return from using financial advisors; moreover, with the incentives given to advisors they seem to increase account turnover as well as the saving volumes directed to mutual funds. In this study, the effects on saving behavior are analyzed and defined as the number of financial products held in stock and the saving volumes transferred monthly to mutual funds. Measuring the near-in-time average effects from one financial advisory meeting on Swedish bank customers, financial products increased by about 2 percent, while funds channeled to mutual funds increased by 22 percent, compared with a control group in which the bank customers had had advisory meetings in the past, but not in the treatment period. This study concludes that the largest effects on saving behavior are observed for the young customers and, in particular, those with low wealth, and for the customers who provide the lowest profitability to the bank. Nevertheless, to conclude that financial advisory meetings are not profitable for the bank is not a proposed managerial implication, rather, the usefulness of an analysis of the time and the actions needed to move customers up into higher profitability is suggested.
Working Paper Series, 2013
The purpose of this paper is to discuss different types of strategic alliances that a developer m... more The purpose of this paper is to discuss different types of strategic alliances that a developer might establish in order to undertake risky development projects. Individual developers as well as cities and municipalities can become more competitive by mobilizing resources and allocating risks efficiently. Based on the general literate on strategic alliances, we argue that developers and other actors in the development process may realize a large number of potential benefits of alliance activity. Strategic alliances can be designed to meet critical resource and risk management needs of a residential developer throughout a typical development process.
Proceedings of the 10th European Real Estate Society Conference - Helsinki, Finland, 2003
The purpose of this paper is to investigate how an insurance policy against major increases in re... more The purpose of this paper is to investigate how an insurance policy against major increases in rents on the housing market could be designed1. The insurance policy presented below can be an interesting alternative to tenancy rent control policies. The proposed insurance policy makes it possible for tenants to protect themselves against the risks of strong rent increases. The insurance policy can be viewed as a call option - the insurance gives the tenant the right to stay in his or her apartment, paying a rent that is the lower of the current market rent and the rent according to the terms of the insurance contract . The main points regarding the proposed insurance policy are: When leasing to a new tenant, rents are based on prevailing level of market rents. The landlord is the insurer and the landlord is obliged to offer his tenants insurance against major rent increases. Tenants who have not purchased any insurance contract, are supposed to pay rents equal to market rents whenever rents are being changed. The insurance gives the tenant the right to stay in his or her apartment, paying a rent that is the lower of the market rent and the rent according to the terms of the insurance contract (the strike rent), when the rent is reviewed. The insurance contract shall be indexed to the inflation rate or another official cost index. The maximum premium a tenant has to pay when buying an insurance policy shall not exceed a pre-specified and regulated level. The landlord is obliged to offer tenants a minimum amount of different alternatives of insurance periods, e.g. 5, 10 and 15 years.
Securitized real estate shares constitute an important investment vehicle for institutional inves... more Securitized real estate shares constitute an important investment vehicle for institutional investors and households. Investors both hold real estate shares directly or indirectly through for instance real estate mutual funds as well as real estate ETFs. Therefore it is interesting to study the inter-relationship between listed property share indexes and other major stock and bond market sector indexes. We apply different econometrics methods and models on daily data from the Stockholm Stock Exchange, to study the interaction between daily return figures for listed real estate share index series, and other major stock and bond market sector indexes. We find evidence that some stock and bond market sector indexes are especially inter-related with the real estate stock market index.
Construction Economics and Building, 2014
It has been reported that productivity developments in construction are slow compared to other se... more It has been reported that productivity developments in construction are slow compared to other sectors. Measuring productivity is however not easy and it might have been underestimated due to deficiencies in the index that is used when the value added in current prices is converted into value added at constant prices. A central problem when deflating nominal prices is that the deflation should only take away price changes for identical products and not price changes related to quality changes and improvements necessitated by new environmental conditions and legislation as well as demand for higher safety. The aim of this project is to help fill this gap by looking at the quality changes over time in road construction. A combination of comparative studies and interviews with practitioners from public and private sectors that are involved in road construction projects were conducted. It was found that there had been both direct quality changes in the roads, primarily to improve safety...
Property Management, 2014
Purpose – The purpose of this paper is to investigate the determinants of the capital structure o... more Purpose – The purpose of this paper is to investigate the determinants of the capital structure of listed property firms in China. Design/methodology/approach – The study is based on quantitative methods such as dynamic panel data models and a panel data set containing financial and accounting data for all listed property companies from 2006 to 2010 in China. Findings – The findings confirm that the state-own shares, the fixed asset values, the total size of assets and profitability have a positive and significant impact on the leverage ratio of listed property firms in China. The negative impact of the tax shields and the currency ratio, and significant impact of state-own shares on capital structure cannot be explained by existing capital structure theory but the unique property market regulation environment and market conditions in China. Research limitations/implications – The findings confirm the applicability of trade-off theory (except for the correlation between leverage and...
The purpose of this review article is to give a systematic overview of strategies to make home ow... more The purpose of this review article is to give a systematic overview of strategies to make home ownership affordable to more households. The strategies are divided into the four distinct time periods of a typical 'housing career': Down payment accumulation stage, transaction stage, ownership stage and selling stage. Research show that home ownership is the preferred choice of a majority of households. Although home ownership rates have been on the increase since World War II, there are recent signs in some large economies that this trend has been halted. It is argued that little is known on the effectiveness of a specific strategy and that a wide range of strategies are needed should the government wish to encourage home ownership. Moreover, considering the weak financial situation of most governments, direct subsidies and grants are probably not very interesting from a government perspective.
In many applications of real options there is an assumption of complete capital markets. For the ... more In many applications of real options there is an assumption of complete capital markets. For the perpetual optimal timing option this means that if the underlying asset (e.g. a developed project) does not pay out any cash flows, then there is no finite optimal time at which the investment should be undertaken. In contrast, when the markets are incomplete, there could be a possibility of a finite optimal stopping time. We discuss the incomplete case in detail, connect it with yields and "implied yields" and give several examples of incomplete market models where could be a finite optimal time to invest.
Journal of Sustainable Real Estate, 2013
ABSTRACT In order to further mitigate negative environmental impact, the European Union (EU) has ... more ABSTRACT In order to further mitigate negative environmental impact, the European Union (EU) has adopted the so called ‘‘20-20-20’’ goals, in which a (primary) energy reduction target is included. Subsequently, the Energy Performance Certificate (EPC) for buildings (via the Directive on the Energy Performance of Buildings) has been implemented in EU member states. In this paper, we examine the impact of EPCs on office revenues. By and large, we find that better EPC ratings have a positive and significant effect on revenues. This research area is important as improved energy efficiency in the built environment is necessary in order to reach the EU reduction target.
This paper develops a formula for pricing a residential option with respect to a tenant’s so call... more This paper develops a formula for pricing a residential option with respect to a tenant’s so called outside option. Two parameters are introduced: The tenant’s transaction cost of moving and moving ...
It is often argued that great energy savings can be accomplished by upgrading existing energy-ine... more It is often argued that great energy savings can be accomplished by upgrading existing energy-inefficient building stock. However, even if these investments are profitable at the time, it might be even better to postpone these measures as even better investments can be realized later on. Such behavior can be analyzed by applying the real options analysis (ROA) framework. In addition, the retrofit scenario differs from the new development case, as the former is affected by the value of the already existing building, since this value must be “surrendered” in order to acquire revenues from the retrofitted building. The main purpose of this paper is to evaluate green refurbishments using the real options methodology. In doing so, we are able to accurately estimate the “embedded” real option values of deferring green refurbishments, thereby adding to current explanations of the energy-efficiency gap. This paper also discusses policy suggestions to reduce the value of waiting and thus tri...
SN Business & Economics, 2021
Traditional models of irreversible investment problems assume that the investment starts generati... more Traditional models of irreversible investment problems assume that the investment starts generating cash flows immediately, i.e., at the same time as the investment is undertaken. Real-world investment situations are characterized by time-to-build or investment lags, which means that there is a time difference between when the investment is made and when the investment starts generating cash flows. We combine two existing models of investment lags to obtain a flexible, yet simple, way of modelling and analyzing the effects of investment lags. Both traditional models, and models that incorporate the effects of time-to-build, typically assume that the expected future cash flows generated by an investment are represented by a single cash flow that reflects the size of the market value of an investment. To reflect real-world cases where investments generate cash flows in several time periods, we present a framework in which cash flows are explicitly allowed to be spread out in time. Our...
FUZZY ECONOMIC REVIEW, 2018
In many applications of real options there is an assumption of complete capital markets. For the ... more In many applications of real options there is an assumption of complete capital markets. For the perpetual timing option this means that if the underlying asset does not pay out any cash flows, then there is no finite optimal time at which the investment should be undertaken. In contrast, when the market is incomplete there is a possibility of having a finite optimal stopping time even in the cases when the underlying asset does not pay out any cash flows. We discuss the incomplete case in models driven by both Brownian motion(s) and a Poisson process and connect it with the concept of an implied yield. The implied yield will in these models extend the concept of a monetary yield (i.e. a yield that represents the fraction of the value of an asset paid out as a cash flow). Several examples of incomplete market models where there could be a finite optimal time to invest are given.
Journal of European Real Estate Research, 2020
PurposeThis paper aims to analyze how nearby property prices are affected by new construction pro... more PurposeThis paper aims to analyze how nearby property prices are affected by new construction projects in Stockholm. If there is an impact on property prices, the authors endeavor to investigate whether the effects vary among different areas within the municipality, for different groups of inhabitants and for different types of housing (i.e. public versus private housing).Design/methodology/approachThe authors use a difference-in-difference specification in a hedonic model, and the sample consists of more than 90,000 observations over the period 2005-2013.FindingsThe results are robust and indicate that house prices in nearby areas increase following the completion of infill development. The results also indicate that infill development has a positive spillover effect on nearby dwelling prices only in areas with lower incomes, more public housing units and more inhabitants born abroad.Originality/valueIt provides an analysis on how nearby property prices are affected by new construc...
Journal of Retailing and Consumer Services, 2016
Earlier research points to negative effects on the risk-weighted return from using financial advi... more Earlier research points to negative effects on the risk-weighted return from using financial advisors; moreover, with the incentives given to advisors they seem to increase account turnover as well as the saving volumes directed to mutual funds. In this study, the effects on saving behavior are analyzed and defined as the number of financial products held in stock and the saving volumes transferred monthly to mutual funds. Measuring the near-in-time average effects from one financial advisory meeting on Swedish bank customers, financial products increased by about 2 percent, while funds channeled to mutual funds increased by 22 percent, compared with a control group in which the bank customers had had advisory meetings in the past, but not in the treatment period. This study concludes that the largest effects on saving behavior are observed for the young customers and, in particular, those with low wealth, and for the customers who provide the lowest profitability to the bank. Nevertheless, to conclude that financial advisory meetings are not profitable for the bank is not a proposed managerial implication, rather, the usefulness of an analysis of the time and the actions needed to move customers up into higher profitability is suggested.
Working Paper Series, 2013
The purpose of this paper is to discuss different types of strategic alliances that a developer m... more The purpose of this paper is to discuss different types of strategic alliances that a developer might establish in order to undertake risky development projects. Individual developers as well as cities and municipalities can become more competitive by mobilizing resources and allocating risks efficiently. Based on the general literate on strategic alliances, we argue that developers and other actors in the development process may realize a large number of potential benefits of alliance activity. Strategic alliances can be designed to meet critical resource and risk management needs of a residential developer throughout a typical development process.
Proceedings of the 10th European Real Estate Society Conference - Helsinki, Finland, 2003
The purpose of this paper is to investigate how an insurance policy against major increases in re... more The purpose of this paper is to investigate how an insurance policy against major increases in rents on the housing market could be designed1. The insurance policy presented below can be an interesting alternative to tenancy rent control policies. The proposed insurance policy makes it possible for tenants to protect themselves against the risks of strong rent increases. The insurance policy can be viewed as a call option - the insurance gives the tenant the right to stay in his or her apartment, paying a rent that is the lower of the current market rent and the rent according to the terms of the insurance contract . The main points regarding the proposed insurance policy are: When leasing to a new tenant, rents are based on prevailing level of market rents. The landlord is the insurer and the landlord is obliged to offer his tenants insurance against major rent increases. Tenants who have not purchased any insurance contract, are supposed to pay rents equal to market rents whenever rents are being changed. The insurance gives the tenant the right to stay in his or her apartment, paying a rent that is the lower of the market rent and the rent according to the terms of the insurance contract (the strike rent), when the rent is reviewed. The insurance contract shall be indexed to the inflation rate or another official cost index. The maximum premium a tenant has to pay when buying an insurance policy shall not exceed a pre-specified and regulated level. The landlord is obliged to offer tenants a minimum amount of different alternatives of insurance periods, e.g. 5, 10 and 15 years.
Securitized real estate shares constitute an important investment vehicle for institutional inves... more Securitized real estate shares constitute an important investment vehicle for institutional investors and households. Investors both hold real estate shares directly or indirectly through for instance real estate mutual funds as well as real estate ETFs. Therefore it is interesting to study the inter-relationship between listed property share indexes and other major stock and bond market sector indexes. We apply different econometrics methods and models on daily data from the Stockholm Stock Exchange, to study the interaction between daily return figures for listed real estate share index series, and other major stock and bond market sector indexes. We find evidence that some stock and bond market sector indexes are especially inter-related with the real estate stock market index.
Construction Economics and Building, 2014
It has been reported that productivity developments in construction are slow compared to other se... more It has been reported that productivity developments in construction are slow compared to other sectors. Measuring productivity is however not easy and it might have been underestimated due to deficiencies in the index that is used when the value added in current prices is converted into value added at constant prices. A central problem when deflating nominal prices is that the deflation should only take away price changes for identical products and not price changes related to quality changes and improvements necessitated by new environmental conditions and legislation as well as demand for higher safety. The aim of this project is to help fill this gap by looking at the quality changes over time in road construction. A combination of comparative studies and interviews with practitioners from public and private sectors that are involved in road construction projects were conducted. It was found that there had been both direct quality changes in the roads, primarily to improve safety...
Property Management, 2014
Purpose – The purpose of this paper is to investigate the determinants of the capital structure o... more Purpose – The purpose of this paper is to investigate the determinants of the capital structure of listed property firms in China. Design/methodology/approach – The study is based on quantitative methods such as dynamic panel data models and a panel data set containing financial and accounting data for all listed property companies from 2006 to 2010 in China. Findings – The findings confirm that the state-own shares, the fixed asset values, the total size of assets and profitability have a positive and significant impact on the leverage ratio of listed property firms in China. The negative impact of the tax shields and the currency ratio, and significant impact of state-own shares on capital structure cannot be explained by existing capital structure theory but the unique property market regulation environment and market conditions in China. Research limitations/implications – The findings confirm the applicability of trade-off theory (except for the correlation between leverage and...