Non-Institutional Factors That Contribute to the Green Building Premium

Kwong Wing Chau (), Derek D. Huo and Ervi Liusman
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Kwong Wing Chau: Ronald Coase Centre for Property Rights Research, HKUrbanLabs, The University of Hong Kong, Hong Kong, China
Derek D. Huo: Ronald Coase Centre for Property Rights Research, HKUrbanLabs, The University of Hong Kong, Hong Kong, China
Ervi Liusman: School of Hotel and Tourism Management, Chinese University of Hong Kong, Hong Kong, China

Land, 2024, vol. 13, issue 7, 1-11

Abstract: This study examines the non-institutional factors that affect the green building premium (GBP). Residential properties are chosen for empirical analysis since they are free from institutional factors such as corporate social responsibility (CSR). The study adopts both Mahalanobis Distance Matching (MDM) and Propensity Score Matching (PSM) to identify the treatment observations (buildings with a green building certificate) and the control observations (non-green buildings). The results are robust across the two methods. The study found that residential buildings with green certificates command a premium and that this premium does not decline over time, which suggests that consumers are willing to pay a GPB in the absence of institutional mandatory requirements. Furthermore, the GBP is higher but with a slower growth rate in higher-income areas, which is consistent with the post-materialist value theory and the prosperity or affluence hypothesis.

Keywords: affluence hypothesis; green building certificate; green building; green building premium; residential market; post-materialist value theory; prosperity hypothesis (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2024
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