Pricing strategies for leasing non-public-use land

Setting a price for leasing non-public-use land is flexibility available to government authorities. Therefore, this study employs a stochastic optimization model incorporating relevant parameters of pricing strategies for leasing non-public-use land based on real option analysis (ROA). This pricing model is distinct from existing literature, which is not based on the developer's perspective. In particular, the exercise prices of “option to lease” are land ownership values under similar conditions. Among the 12 cases in which superficies rights of commercial lands were awarded in Taiwan, this empirical investigation found that the leasing of seven cases was more valuable than land ownership values. This study also suggests pricing strategies for leasing superficies rights under different scenarios and provides new insights for leasing non-public-use land from the perspective of the government.