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Different grades and different green premiums: a cross sectional analysis of a green certification scheme

Author/s: Jayantha Wadu Mesthrige, O.T. Oladinrin, A.A. Javed

Date Published: 01/09/2020

Published in: Volume 26 - 2020 Issue 3 (pages 207 - 221)

Abstract

Green certification is often hailed as an effective means of resolving information asymmetry by providing prospective buyers with credible proof of a property’s level of quantitative sustainability performance. These certification schemes are also considered as providing the credible identification labels needed to generate a market premium. This study analysed whether different market premiums (financial implications) exist across different ratings of the HK-BEAM certification scheme. The paper used hedonic price model (HPM) to evaluate the influence of green certification rating levels on residential property prices in Hong Kong. The results indicate, on average, that HK-BEAM certification increases price values by between 5.3% and 6.7%. Most importantly, the results indicate that significant price premium differences exist across the different ratings available for HK-BEAM certified buildings. The findings provide strong proof of the existence of a premium across ratings.

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Keywords

Beam Plus Scheme - Green Buildings - Green Certification - Hong Kong - Rating System - Residential Property

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