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Which “Greenness” is Valued? Evidence from Green Condominiums in Tokyo

Author

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  • Yoshida, Jiro
  • Sugiura, Ayako

Abstract

This is one of the first researches on price differentials of green buildings in Asia. Using a rich set of data on condominium transactions and mandatory evaluation of environmental performance in Tokyo, we estimate the effects of itemized green scores on transaction prices. Although green condominiums are on average traded at a premium, the premium is mainly attributed to the building age and quality. After controlling for relevant attributes, we find significant price discounts for newly constructed green condominiums. However, green condominiums experience little depreciation at least during the initial years. Using itemized scores, we find that the long-life design mitigates price discounts, but other factors such as the use of eco-friendly materials, renewable energy, water reuse, and greening exacerbate discounts. Several possibilities are discussed including high future maintenance costs of green condominiums.

Suggested Citation

  • Yoshida, Jiro & Sugiura, Ayako, 2010. "Which “Greenness” is Valued? Evidence from Green Condominiums in Tokyo," MPRA Paper 23124, University Library of Munich, Germany, revised 02 Jun 2010.
    • Handle: RePEc:pra:mprapa:23124
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    References listed on IDEAS

    as
    1. Franz Fuerst & Patrick McAllister, 2008. "Green Noise or Green Value? Measuring the Price Effects of Environmental Certification in Commercial Buildings," Real Estate & Planning Working Papers rep-wp2008-09, Henley Business School, University of Reading.
    2. Piet Eichholtz & Nils Kok & John M. Quigley, 2010. "Doing Well by Doing Good? Green Office Buildings," American Economic Review, American Economic Association, vol. 100(5), pages 2492-2509, December.
    3. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. ¿Se valora más un edificio certificado como eficiente?
      by Ana Ramos in Economics for Energy on 2012-05-11 12:57:00

    Citations

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    Cited by:

    1. Copiello, Sergio, 2017. "Building energy efficiency: A research branch made of paradoxes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 1064-1076.
    2. Fuerst, Franz & McAllister, Patrick, 2011. "The impact of Energy Performance Certificates on the rental and capital values of commercial property assets," Energy Policy, Elsevier, vol. 39(10), pages 6608-6614, October.
    3. Benedetto Manganelli & Pierluigi Morano & Francesco Tajani & Francesca Salvo, 2019. "Affordability Assessment of Energy-Efficient Building Construction in Italy," Sustainability, MDPI, vol. 11(1), pages 1-17, January.
    4. de Ayala, Amaia & Galarraga, Ibon & Spadaro, Joseph V., 2016. "The price of energy efficiency in the Spanish housing market," Energy Policy, Elsevier, vol. 94(C), pages 16-24.
    5. Ronan C. Lyons & Sean Lyons & Sarah Stanley, 2015. "The Price Effect of Building Energy Ratings in the Dublin Residential Market," Trinity Economics Papers tep0415, Trinity College Dublin, Department of Economics.
    6. Maria-Francisca Cespedes-Lopez & Raul-Tomas Mora-Garcia & V. Raul Perez-Sanchez & Juan-Carlos Perez-Sanchez, 2019. "Meta-Analysis of Price Premiums in Housing with Energy Performance Certificates (EPC)," Sustainability, MDPI, vol. 11(22), pages 1-59, November.
    7. Aliz McLean & Áron Horvath & Hubert Janos Kiss, 2013. "How Does an Increase in Energy Efficiency Affect Housing Prices? A Case Study of a Renovation," ERES eres2013_117, European Real Estate Society (ERES).
    8. Franz Fuerst & Pat McAllister, "undated". "The Impact of Energy Performance Certificates on the Rental and Capital Values of Commercial Property Assets: Some Preliminary Evidence from the UK," Real Estate & Planning Working Papers rep-wp2011-10, Henley Business School, University of Reading.
    9. Ramos, A. & Gago, A. & Labandeira, X. & Linares, P., 2015. "The role of information for energy efficiency in the residential sector," Energy Economics, Elsevier, vol. 52(S1), pages 17-29.
    10. Azhgaliyeva, Dina & Rahut, Dil, 2022. "Promoting Green Buildings: Barriers, Solutions, and Policies," ADBI Working Papers 1331, Asian Development Bank Institute.
    11. Franz Fuerst & Constantine Kontokosta & Pat McAllister, 2011. "Taking the LEED? Analyzing Spatial Variations in Market Penetration Rates of Eco-Labeled Properties," Real Estate & Planning Working Papers rep-wp2011-01, Henley Business School, University of Reading.
    12. Horváth, Áron & Kiss, Hubert János & McLean, Aliz, 2013. "Hat-e a lakóingatlanok árára az energiahatékonyság? [Does energy efficiency affect the prices of residential units?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 1025-1042.
    13. Ana Ramos & Alicia Pérez-Alonso & Susana Silva, 2015. "Valuing Energy Performance Certificates in the Portuguese Residential," Working Papers 02-2015, Economics for Energy.
    14. Paloma Taltavull de La Paz & V. Raul Perez-Sanchez & Raul-Tomas Mora-Garcia & Juan-Carlos Perez-Sanchez, 2019. "Green Premium Evidence from Climatic Areas: A Case in Southern Europe, Alicante (Spain)," Sustainability, MDPI, vol. 11(3), pages 1-29, January.
    15. Ankamah-Yeboah, Isaac & Rehdanz, Katrin, 2014. "Explaining the variation in the value of building energy efficiency certificates: A quantitative meta-analysis," Kiel Working Papers 1949, Kiel Institute for the World Economy (IfW Kiel).
    16. Chowdhury, Tasnim & Datta, Rajib & Mohajan, Haradhan, 2013. "Green finance is essential for economic development and sustainability," MPRA Paper 51169, University Library of Munich, Germany, revised 09 Jun 2013.
    17. Zheng, Siqi & Wu, Jing & Kahn, Matthew E. & Deng, Yongheng, 2012. "The nascent market for “green” real estate in Beijing," European Economic Review, Elsevier, vol. 56(5), pages 974-984.
    18. Florian Fizaine Fizaine & Pierre Voye & Catherine Baumont, 2018. "Les études hédoniques soutiennent-elles une valeur verte élevée dans le bâtiment ? Une réponse par la méta-analyse," Post-Print halshs-01957447, HAL.

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    More about this item

    Keywords

    sustainability; green building; hedonic pricing; transaction price; residential real estate; Japan;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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