The price premium for green-labelled housing: Evidence from China

Abstract

The Chinese central government introduced the ‘Chinese Green Building Label’ in 2008, which makes China one of the few developing countries with an official rating system of buildings’ performance in sustainability. This paper investigates the existence and magnitude of the price premium associated with this official green label in the residential sector. Based on a unique data set of green-labelled, newly built housing projects and their non-labelled counterparts from around the country in 2013, an empirical analysis suggests that the labelled housing projects attract a price premium of 6.9% compared with their non-labelled counterparts. Further analysis suggests that this official green label is more effective as a reliable signal of buildings’ energy efficiency in the Chinese context compared with developers’ self-advertised ‘greenness’. These results provide preliminary evidence that with this official rating system, the investment in buildings’ energy-efficiency could be potentially profitable for housing developers in China, and such profitability may herald a rapid development of the green housing market in urban China.

Measuring Green Value in Housing Market: Evidence from Hangzhou

“…This comparison implies that the price premium caused by green marketing can offset incremental costs, encouraging developers to make efforts for the construction of green housing. Note: *** , ** , and * represent significance at the 1%, 5%, and 10% levels, respectively.. Table 4 Incremental costs for green housing (yuan/m2) Research One-star rated Two-star rated Three-star rated Yip et al [12] 15.98 35.18 67.98 Zhang et al [7] <100 <300 <500…”

“…In 2008, the Ministry of Housing and Urban-Rural Development (MOHURD) promoted a nationwide program the Chinese Green Building Label (CGBL) and established the certification rating system which is appropriate for Chinese buildings [1]. Many scholars have studied the price premium effect caused by a green certification or label [1][2][3][4][5][6][7]. They found a positive relationship between such green certification or label and housing prices, which indicates that certification or label carries a price premium for housing.…”

The Value of Going Green in the Hotel Industry: Evidence from Beijing

“…, Lee and Guerin , Zuo and Zhao , Zhang et al . ). Customer satisfaction levels regarding indoor environmental quality and environmental responsibility ( REVIEW_IEQ , REVIEW_ENV ) are measured by calculating the ratio of compliments in customer reviews minus the ratio of complaints in customer reviews.…”

“…, Zhang et al . ). The measures commonly adopted in green buildings to improve indoor environmental quality include both passive measures, such as optimizing their design to make full use of natural resources, including reinforcing wall insulation and utilizing daylight and improving natural ventilation, as well as the active measures of efficient mechanical systems, such as improving air‐conditioning and installing air purifiers (Zhu and Lin , Zhu, Lin and Yuan ).…”

Motivating Project Owners to Increase Their Commitment towards Improving the Delivery Performance of Green Building Projects

“…Especially under the current macro-economic environment, most private clients need a payback period of between seven and twenty years (Gou, et al, 2013;Li, Yang, et al, 2014) and it is difficult to convince them to inject the extra investment involved while the potential of the resulting green building premium to offset its high initial cost at all is still being debated, and remains inconclusive (Choi, 2009a;Cotten, 2012;Harrison & Seiler, 2011;Robichaud & Anantatmula, 2010;Zhang & Liu, 2014a). This dissuades many private owners from voluntarily adopting green construction practices (Gou, et al, 2013).…”