Addae-Dapaah, K;
Wilkinson, J;
(2021)
Green premium: what is the implied prognosis for sustainability?
Journal of Sustainable Real Estate
, 12
pp. 16-33.
10.1080/19498276.2021.1915663.
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Abstract
We live in a world where economic considerations underpin almost every decision to determine our social priorities. It is not surprising then that sustainability has fast become, among other things, economic advocacy. This has led to a proliferation of studies to establish the provenance of green premium to provide impetus for sustainable real estate development to drive the sustainability agenda. The extant literature is replete with studies that conclude that green buildings, which are a proxy for sustainable real estate, command a green premium notwithstanding disagreement about the size of the green premium. We revisit the green premium debate by analysing BREEAM certified office buildings (proxy for green buildings) in the Greater London area to ascertain the prevalence of green premium to answer the following questions: is the premium truly green (green-magic)? What prognosis does green premium provide for sustainability? The study uses quantitative analysis (hedonic model to analyse 2,842 CoStar transaction data from 2008 to 2018 inclusive and psychographic analysis based on primary data from a questionnaire survey of approximately 450 BREEAM certified building owners and occupiers in the Greater London area to address the research questions. The preliminary results of the hedonic model analysis show that BREEAM certification commands a rental and price premium of 4.3% and 22.3% respectively. Furthermore, the results reveal that a higher certification level generally generates a higher premium while certified buildings in outer zones generate a higher premium than those in the CBD. In addition, the results of both the quantitative and psychographic analyses imply that the premium is more a novelty premium than green-magic. This portends a dismal prognosis for sustainability to warn us that sustainability cannot be won on purely economic grounds. Finally, the results of the psychographic analyses show that there is no meeting of minds (consensus ad idem) between investors in green office buildings on one side and green office space users (tenants) on the other. The results of the study could be of interest to London green office building market participants, researchers, practitioners and sustainability adherents.
| Type: | Article |
|---|---|
| Title: | Green premium: what is the implied prognosis for sustainability? |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1080/19498276.2021.1915663 |
| Publisher version: | https://doi.org/10.1080/19498276.2021.1915663 |
| Language: | English |
| Additional information: | This work is licensed under a Creative Commons Attribution 4.0 International License. The images or other third party material in this article are included in the Creative Commons license, unless indicated otherwise in the credit line; if the material is not included under the Creative Commons license, users will need to obtain permission from the license holder to reproduce the material. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/ |
| Keywords: | BREEAM certification, Green premium, Sustainability, Prognosis |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > The Bartlett School of Planning |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10132826 |
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