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

Abstract

Purpose

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.

Citation

Mesthrige Jayantha, W. and Sze Man, W. (2013), "Effect of green labelling on residential property price: a case study in Hong Kong", Journal of Facilities Management, Vol. 11 No. 1, pp. 31-51. https://doi.org/10.1108/14725961311301457