Green Luxury Goods? The Economics of Eco-Labels in the Japanese Housing Market

Franz Fuerst and Chihiro Shimizu

No 7, HIT-REFINED Working Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This paper aims to extend the existing evidence on the investment value of green buildings to international markets, specifically the residential market in Japan. Using a unique transaction database of condominiums in the Tokyo metropolitan area and a hedonic analytical framework, we find that green buildings command a small but significant premium on both the asking and transaction prices. This finding is consistent with results from other countries. As far as we are aware, this is also the first study of green buildings’ economic value based on a hedonic model incorporating buyer characteristics. However, further analysis reveals that this premium is primarily driven by wealthy households that exhibit a higher willingness-to-pay for eco-labelled condominiums, both as a total amount and as a fraction of the total sales price. We therefore conclude that eco-labels are perceived as a luxury good in the Japanese housing market rather than a way to save money on lower utility bills.

Keywords: Green building; green label; hedonic approach; offer price; bid price; market price function; omitted variable bias (search for similar items in EconPapers)
JEL-codes: D92 G51 M14 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2014-09
New Economics Papers: this item is included in nep-ene, nep-env and nep-ure
Note: First version: 28th May, 2014, This version: 28th August, 2014
References: View references in EconPapers View complete reference list from CitEc
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/26843/wp007.pdf

Related works:
Journal Article: Green luxury goods? The economics of eco-labels in the Japanese housing market (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:remfce:7

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