Effect of green labelling on residential property price: a case study in Hong Kong: Fid-Bau Portal

Effect of green labelling on residential property price: a case study in Hong Kong

Mesthrige Jayantha, Wadu / Sze Man, Wan

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It is known that people's expectation towards their living “green” is increasing. Green features are now regarded as one of the important considerations of buyers in purchasing a property. This research paper aims to investigate the significance of the green features of residential buildings to property buyers.

Design/methodology/approach –

HK-BEAM certification and HK-GBC Award are used as the measurement of green residential buildings. The study used a hedonic price model to determine whether there is a relationship between green features and residential property price and the influence of green features on the residential property price if there is such relationship.

Findings –

The empirical results show that green features have a significant and positive relationship with residential property price. People are willing to pay more for green buildings recognized by HK-BEAM and HK-GBC. They are willing to pay a sale price premium ranging from 3.4 percent to 6.4 percent. Furthermore, a relatively larger premium is found in Hong Kong Island compared to the New Territories.

Research limitations/implications –

The results imply that environmentally friendly green buildings both increase the value of a property and attract property buyers; and well-recognized green building schemes add value to properties and hence increase the property price.

Originality/value –

The study has contributed an indication of the amount a buyer would be willing to pay for quality green buildings as a reference for users, developers and investors. The study sheds light on the ability of the market to capitalize environmental considerations in investment decisions.