The Effects of Multiple Green Factors on Condominium Prices
30 Pages Posted: 10 Jul 2010 Last revised: 26 Jan 2016
Date Written: December 23, 2013
This paper analyzes the transaction prices of green buildings assessed on the basis of multiple green factors. Our theoretical model demonstrates that the initial green premium can be negative but becomes positive as the building ages if a green building has a higher life-cycle cost and a longer economic life. Our empirical analysis of green condominiums in Tokyo confirms this prediction. We additionally find that the longer-life design is associated with a price premium, but the use of renewable energy and recycled materials and water is associated with price discounts. The price discounts are interpreted as the capitalization of a greater life-cycle user cost.
Keywords: sustainability, green building, hedonic pricing, property price, residential real estate, Japan
JEL Classification: Q51, R21, R31
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