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Non-Institutional Factors That Contribute to the Green Building Premium

Author

Listed:
  • 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)

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.

Suggested Citation

  • Kwong Wing Chau & Derek D. Huo & Ervi Liusman, 2024. "Non-Institutional Factors That Contribute to the Green Building Premium," Land, MDPI, vol. 13(7), pages 1-11, July.
    • Handle: RePEc:gam:jlands:v:13:y:2024:i:7:p:1044-:d:1433440
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    References listed on IDEAS

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