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Land Lease Option

What is 'Land Lease Option'

An option within a lease contract that grants the lessee the right to extend the period of the lease beyond the original length of time. Usually, the lessee is required to pay a premium for the option, such as a small amount of money in each year of the original lease.

Explaining 'Land Lease Option'

Like all options contracts, the land lease option allows its holder to act on favorable future market conditions. The lessee may want an option for many reasons. If the future market value of the land is uncertain, an option will allow the lessee to extend a relatively cheap lease in a rising price environment. For corporations, lease options allow them to reevaluate operations based on leased land in the future, before locking themselves into very long-term contracts.


Further Reading


Containing land grabs: A misguided response to rural conflicts over land
www.tandfonline.com [PDF]
… is no land market for farmers since they cannot own or lease land individually and … of the pattern of land leasing in Shanghai demonstrates that the areas leased for commercial … Chinese authorities recognize that land leasing monetizes a finite asset and cannot indefinitely play …

Valuing long-term leases: The option to redevelopValuing long-term leases: The option to redevelop
link.springer.com [PDF]
… is no land market for farmers since they cannot own or lease land individually and … of the pattern of land leasing in Shanghai demonstrates that the areas leased for commercial … Chinese authorities recognize that land leasing monetizes a finite asset and cannot indefinitely play …

Empirical testing of real option pricing models using Land Price Index in JapanEmpirical testing of real option pricing models using Land Price Index in Japan
www.emerald.com [PDF]
… is no land market for farmers since they cannot own or lease land individually and … of the pattern of land leasing in Shanghai demonstrates that the areas leased for commercial … Chinese authorities recognize that land leasing monetizes a finite asset and cannot indefinitely play …

Urbanization, land development, and land financing: Evidence from Chinese citiesUrbanization, land development, and land financing: Evidence from Chinese cities
www.tandfonline.com [PDF]
… is no land market for farmers since they cannot own or lease land individually and … of the pattern of land leasing in Shanghai demonstrates that the areas leased for commercial … Chinese authorities recognize that land leasing monetizes a finite asset and cannot indefinitely play …

Binomial option pricing models for real estate developmentBinomial option pricing models for real estate development
www.emerald.com [PDF]
… is no land market for farmers since they cannot own or lease land individually and … of the pattern of land leasing in Shanghai demonstrates that the areas leased for commercial … Chinese authorities recognize that land leasing monetizes a finite asset and cannot indefinitely play …

Option pricing and timberland's land-use conversion optionOption pricing and timberland's land-use conversion option
www.jstor.org [PDF]
… is no land market for farmers since they cannot own or lease land individually and … of the pattern of land leasing in Shanghai demonstrates that the areas leased for commercial … Chinese authorities recognize that land leasing monetizes a finite asset and cannot indefinitely play …

Is there a term structure in land lease rates?Is there a term structure in land lease rates?
academic.oup.com [PDF]
… is no land market for farmers since they cannot own or lease land individually and … of the pattern of land leasing in Shanghai demonstrates that the areas leased for commercial … Chinese authorities recognize that land leasing monetizes a finite asset and cannot indefinitely play …

'Land to the foreigners': economic, legal, and socio-cultural aspects of new land acquisition schemes in Ethiopia'Land to the foreigners': economic, legal, and socio-cultural aspects of new land acquisition schemes in Ethiopia
www.tandfonline.com [PDF]
… is no land market for farmers since they cannot own or lease land individually and … of the pattern of land leasing in Shanghai demonstrates that the areas leased for commercial … Chinese authorities recognize that land leasing monetizes a finite asset and cannot indefinitely play …

Real option premium in Hong Kong land pricesReal option premium in Hong Kong land prices
www.emerald.com [PDF]
… is no land market for farmers since they cannot own or lease land individually and … of the pattern of land leasing in Shanghai demonstrates that the areas leased for commercial … Chinese authorities recognize that land leasing monetizes a finite asset and cannot indefinitely play …


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