• Energy Research

This article investigates how real estate stakeholders price information conveyed by voluntary environmental certification schemes in Sao Paulo, the largest metropolitan area of Latin America. In addition to low incidence of green buildings, the city and many local urban agglomerations in Brazil exhibit weak environmental performance due to limited capacity to enforce existing regulation. Therefore, we exploit the role of internationally accredited third-party environmental audit schemes. In addition to comparing labelled and non-labelled properties in a hedonic framework, we also examine pricing discrepancies related with the intention to certify (registration), but no achievement of actual certification in a timely manner. Our results systematically indicate that labelled office properties in Sao Paulo yield a larger green premium than their peers from developed countries. Findings also suggest that applicants who do not obtain the label upon delivery do not receive any green premiums and may be subject to discounts, depending on specification, beyond that of other non-green office buildings. These findings provide further evidence of the relevance of market diffusion and economic governance linked to the implicit pricing of environmental labels.

This paper seeks to elucidate whether high levels of non-disclosure lead to adverse market outcomes in the form of the well-known lemons problem. It also empirically tests whether energy-efficiency ratings (EERs) are reflected in both housing sales prices and rents in the Australian Capital Territory, the only Australian housing market with mandatory ratings for all dwellings at point of sale or lease. Using a comprehensive dataset of sale and lease transactions during the period 2011–2016, a hedonic framework is applied. The analysis confirms that both the reported energy-efficiency levels and other sustainability-related characteristics that are not part of the formal rating assessment influence the pricing of both sales and rental transactions. Characteristics such as heating and cooling systems and the presence of solar power generators are significantly reflected in rents and sales prices, as tenants and buyers are likely to estimate their expected utility costs based on the EER. It is also shown that the option of leaving the EER of a rental property unreported presents a moral hazard for landlords of sub-standard properties, in that the likelihood of EER disclosure increases in line with the number of energy-efficient features of a property as revealed in the marketing material. The analysis also reveals that socio-economically disadvantaged areas suffer from disproportionately higher levels of EER non-disclosure, potentially constituting a ‘double disadvantage’ of non-disclosure and low–energy efficiency dwelling stock. From a market and asset-pricing perspective, it thus seems preferable to extend the requirement to obtain and present a valid EER to the rental market.

© 2016 Elsevier Ltd. This paper investigates the effect of Energy Performance Certificate (EPC) ratings on residential prices in Wales. Drawing on a sample of approximately 192,000 transactions, the capitalisation of energy efficiency ratings into house prices is investigated using two approaches. The first adopts a cross-sectional framework to investigate the effect of EPC rating on price. The second approach applies a repeat-sales methodology to investigate the impact of EPC rating on house price appreciation. Statistically significant positive price premiums are estimated for dwellings in EPC bands A/B (12.8%) and C (3.5%) compared to houses in band D. For dwellings in band E (-3.6%) and F (-6.5%) there are statistically significant discounts. Such effects may not be the result of energy performance alone. In addition to energy cost differences, the price effect may be due to additional benefits of energy efficient features. An analysis of the private rental segment reveals that, in contrast to the general market, low-EPC rated dwellings were not traded at a significant discount. This suggests different implicit prices of potential energy savings for landlords and owner-occupiers.

Empirical evidence from recent studies suggests that the price premium on energy-efficient buildings is potentially higher than the pure capitalisation of energy savings but the empirical evidence on the size of the non-savings components is scant. This study aims to fill this research gap by investigating whether the mandatory energy efficiency ratings for residential properties imply benefits that go beyond energy savings. Using a sample of several thousand apartment transactions from Helsinki, Finland, we first test if higher ratings were significantly associated with higher prices. In addition to a large number of property and neighbourhood characteristics, this dataset contains information on building-level energy usage which allows us to distinguish between the cost savings effect of energy consumption and the value of more intangible factors associated with the energy label. The hedonic model yields a statistically significant 3.3% price premium for apartments in the top three energy-efficiency categories and 1.5% when a set of detailed neighbourhood characteristics are included. When maintenance costs containing energy usage costs are added, a robust and significant price premium of 1.3% persists whereas no differentiation is found for the medium and lower rating categories. These findings may be indicative of energy-efficient buildings having signalling value – and therefore an additional incentive to invest in such buildings – for ‘green’ consumers. However, a favourable energy rating did not appear to speed up the sales process in the analysed market.

This paper investigates the effect of voluntary eco-certification on the rental and sale prices of US commercial office properties. Hedonic and logistic regressions are used to test whether there are rental and sale price premiums for LEED and Energy Star certified buildings. The results of the hedonic analysis suggest that there is a rental premium of approximately 6% for LEED and Energy Star certification. A sale price premium of approximately 35% was found for 127 price observations involving LEED rated buildings and 31% for 662 buildings involving Energy Star rated buildings. When compared to samples of similar buildings identified by a binomial logistic regression for LEED-certified buildings, the existence of a rent and sales price premium is confirmed albeit with differences regarding the magnitude of the premium. Overall, the results of this study confirm that LEED and Energy Star buildings exhibit higher rental rates and sales prices per square foot controlling for a large number of location- and property-specific factors.

This study examines the impact of energy management and productivity-enhancing measures, implemented as part of LEED Existing Buildings Operations and Management (EBOM) certification, on source energy use intensity and rental premiums of office spaces using data on four major US markets. Energy management practices, comprised of commissioning and advanced metering, may reduce energy usage. Conversely, improving air quality and occupant comfort in an effort to increase worker productivity may in turn lead to higher overall energy consumption. The willingness to pay for these features in rental office buildings is hypothesised to depend not only on the extent to which productivity gains enhance the profits of a commercial tenant but also on the lease arrangements for passing any energy savings to the tenant. We apply a difference-in-differences method at a LEED EBOM certification group level and a multi-level modelling approach with a panel data structure. The results indicate that energy management and indoor environment practices have the expected effect on energy consumption as described above. However, the magnitude of the achieved rental premiums appears to be independent of the lease type.

This paper investigates the effect of eco-labeling on rental rates, sale prices and occupancy rates. The consensus emerging from previous studies appears to be that investors in and occupiers of eco-labeled buildings obtain a bundle of benefits related to lower operating costs, reputation benefits and productivity higher. In this study, a hedonic model is used to test whether the presence of an eco-label has a significantly positive effect on rental rates, sale prices and occupancy rates of commercial office buildings in the US. The results suggest that office buildings with Energy Star or LEED eco-labels obtain rental premia of approximately 3–5%. Dual certification produces an additive effect with rental premia estimated at 9%. Respective sale price premia for Energy Star and LEED labeled office buildings are 18% and 25%. The sale price premium for dual certification is estimated at 28–29%. An occupancy premium could not be confirmed for LEED labeled office buildings and only a small positive occupancy premium was found for Energy Star.

This dataset contains information on housing transactions and housing characteristics in the United Kingdom. It is based on Land Registry data and the register of Energy Performance Certificates (EPCs). All properties were sold at least twice after August 2008 (when EPCs became mandatory for residential properties in the United Kingdom). Data were manual and directly extracted from the web address of each of the on-line data sources and, after data pre-treatments (e.g. filtering, merging), transformed into comma-separated values (CSV) file format.