Economic Returns to Energy-Efficient Investments in the Housing Market: Evidence from Singapore

36 Pages Posted: 6 Sep 2010 Last revised: 24 Apr 2011

See all articles by Yongheng Deng

Yongheng Deng

Wisconsin School of Business, University of Wisconsin-Madison

Zhiliang LI

affiliation not provided to SSRN

John M. Quigley

University of California, Berkeley, College of Letters & Science, Department of Economics (Deceased); University of California, Berkeley, Haas School of Business, Real Estate Group (Deceased)

Date Written: April 19, 2011

Abstract

Since January of 2005, 250 building projects in the City of Singapore have been awarded the Green Mark for energy efficiency and sustainability. This paper analyzes the private returns to these investments, evaluating the premium in asset values they command in the market. We analyse almost 37,000 transactions in the Singapore housing market to estimate the economic impact of the Green Mark program on Singapore's residential sector.

We adopt a two-stage research design; in the first stage, a hedonic pricing model is estimated based on transactions involving green and non-green residential units in 697 individual projects or estates. In the second stage, the fixed effects estimated for each project are regressed on the location attributes of the projects, as well as control variables for a Green Mark rating. Our results suggest that the economic returns to green building are substantial.

This is one of the first analyses of the economics of green building in the residential sector, and the only one analysing property markets in Asia. Our results provide insight about the operation of the housing market in one country, but the policy implications about the economic returns to sustainable investments in the property market may have broader applications for emerging markets in Asia.

Keywords: environmental sustainability, housing market, energy efficiency, green labels

JEL Classification: Q51, R1, R21

Suggested Citation

Deng, Yongheng and LI, Zhiliang and Quigley, John M., Economic Returns to Energy-Efficient Investments in the Housing Market: Evidence from Singapore (April 19, 2011). Available at SSRN: https://ssrn.com/abstract=1672364 or http://dx.doi.org/10.2139/ssrn.1672364

Yongheng Deng (Contact Author)

Wisconsin School of Business, University of Wisconsin-Madison ( email )

4110 Grainger Hall
975 University Avenue
Madison, WI 53706
United States
+1 (608) 262-4865 (Phone)

HOME PAGE: http://https://bus.wisc.edu/faculty/yongheng-deng

Zhiliang LI

affiliation not provided to SSRN ( email )

No Address Available

John M. Quigley

University of California, Berkeley, College of Letters & Science, Department of Economics (Deceased) ( email )

Berkeley, CA 94720-3880
United States
510-643-7411 (Phone)
510-643-7357 (Fax)

University of California, Berkeley, Haas School of Business, Real Estate Group (Deceased) ( email )

Berkeley, CA 94720-1900
United States

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