A real options and fuzzy Delphi-based approach for appraising the effect of an urban infrastructure on surrounding lands

An urban infrastructure or requalification project (such as the building of a hospital, school, and so on) in greenfield site, brownfield site or inner-city can change the socioeconomic context of the interested zone so that the value of non-building lands substantially increase. Owning or acquiring a parcel of land in these areas could turn out to be a highly profitable investment. The traditional "deterministic" and static evaluation methods do not capture the opportunity offered by this "uncertainty evolution" in the value of the land. Thus developers bottom their decision on their feeling and experience. This paper, indeed, develops a model based on the Real Option approach to quantitatively estimate the value of a land, which is not currently building, in an urban zone characterized by an urban development process. In order to obtain quasiobjective and real data for the model input, the fuzzy Delphi methodology was used. The model was also tested on the real case of an urban infrastructure project in the city of Bari (Italy).