Abstract
In this paper, we present a generalization of Mandell’s model for the estimation of ground lease pricing. We adjust the model so that it fits, in particular, the Polish legal regulations and situation of the Polish real estate market. The model involves two aspects. The first is the perpetual usufruct, a form of owning the ground similar to a long-term lease, but having some specific features. The second is allowing lease rent adjustments after some fixed period, meaning we consider the situation where the payments are fixed during certain periods as defined in the contract. The proposed model determines the minimum lease amount for the owner, which is the rate at which it is beneficial to lease the property, and the maximum for the lessee, which is the amount above which the lease is unprofitable for the leaseholder or perpetual usufruct.
Highlights
Public real estate management continues to be a relevant issue in the context of sustainability, partly because of the role of real estate resources in different management systems [1,2,3]
It is clear that government intervention is crucial in the modern urban economy [6,7]
Country-specific models and case studies concerning chosen factors were presented by Walters and Kent [43], Guntermann and Thomas [44], Tian [45], Kaganova et al [46], Gholipour and Lean [47], Guarino et al [48], and Irumba [49]. Two papers on this subject were published by Jefferies [50,51], considering the Lessor’s Return Model, which was used to analyze various aspects of the real estate market, in particular in New Zealand
Summary
Public real estate management continues to be a relevant issue in the context of sustainability, partly because of the role of real estate resources in different management systems [1,2,3]. It is clear that government intervention is crucial in the modern urban economy [6,7] This means that they may create both possibilities and limitations in the real estate market mainly through local law. The proposed model can be used as a tool for optimizing decision-making in land management, and a fixed stake may be a benchmark when negotiating rates with a potential lessee. This problem is significant given that real estate generates significant profits for the owner of the land. The negotiated rate of rent should secure the interests of each party, including the owner and tenant (owner and perpetual usufructor)
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