Deep geothermal energy (DGE) is a renewable energy source that is considered to cause a low global warming impact. The potential of DGE for heating is widespread and interest in deep geothermal heating (DGH) has been growing in Europe to help achieving the decarbonization of the heating mix. Nevertheless, despite its large potential, DGH development in Europe remains underexplored. DGH investments are hindered by the risks born by geological and market uncertainties. However, various flexibility options inherent to the development process, such as the option to abandon or defer, could partly mitigate these risks. To account for managerial flexibility in the investment analysis, this study suggests a novel real options (RO) framework. The RO model splits DGH development into five phases, and considers several compound options and geological and market uncertainties to investigate the timing and value of DGH development at the Campine Basin in Northern Belgium. The RO model is coupled to a geo-techno-economic model and is solved using the Least Squares Monte Carlo algorithm. The RO analysis finds a 51% probability of abandonment and an average deferral time for the development of 12 years. The abandon option mitigates the risk of large financial losses in case of inadequate geological conditions. The defer option allows the investors to wait for more favorable market conditions before investing, to increase the project value. The results show that DGH development in the investigated area is not economically desirable. However, the investors' flexibility increases the project value by 12.16 million EUR, compared to a conventional techno-economic analysis. The implementation of supporting policy measures improves the economic performance of the plant. The consideration of flexibility leads to supporting policy measures with 3–4 times lower governmental expenditure, compared to a conventional techno-economic analysis. This study shows that a RO approach is more suitable to investigate DGH investments than static techno-economic methods. The inclusion of flexibility allows for identifying development pathways that increase the project value and for designing more cost-efficient supporting policy schemes.