This thesis explores the use of real option valuation to enhance the financial viability of circular real estate by valuing detachable aluminium façade components. The transition to a circular economy in the built environment is hindered by financial barriers: high upfront investment costs, and the absence of mechanisms to capture end-of-life value of building components. By applying option pricing models, including the Black & Scholes (1973) pricing model, binomial tree- and Heston (1993) option pricing, to a case study, this research uses aluminium commodity price data to value the option to recover raw aluminium embedded in a detachable façade system. A parallel qualitative study involving industry professionals assesses the willingness of market parties to adopt the researched valuation methods and to enter option contracts on detachable building components. Results indicate that real option valuation, as applied to aluminium building components, has the potential to fundamentally shift real estate valuation practices by introducing the concept of assessing buildings and components based on the “moneyness” of recovering embedded raw materials. In addition, by assigning a price to option contracts, this method enables both the demand side of building components to benefit from upfront cash inflows and the supply side to hedge against future material price volatility. ... Read more