Investigating the green premium under the effect of the scheme of BEAM plus on the rental price of green office in Hong Kong

Abstract

This research aims to investigating the Green Premium under the Effect of the Scheme of Beam Plus on the Rental Price of Green Office in Hong Kong. The background of the study emphasizes the effect of green buildings for reduction of carbon emissions to improve the extreme climate weather minimizing the lives danger and properties damage. As a leading city in Asia, Hong Kong has implemented the Climate Action Plan 2050 to combat the climate crisis. According to the research released by HK2050 is Now (2024), the built environment sector contributes significant local carbon emissions of over 60%, particularly in commercial buildings. Since 2011, Hong Kong has implemented the BEAM Plus to encourage green buildings. However, the effect of BEAM Plus Certification in commercial buildings remains an unknown or gap whether the higher green premium on office rental prices can be achieved to motivate the stakeholders such as the developers or owners for more green buildings. Based on the above, this research attempts to investigate the influence of green certification on green premium of office rental price, specifically focusing on the scheme of BEAM Plus for existing buildings. According to the literature review on Oyedokun (2017) and empirical study on Leskinen et al. (2020), they demonstrate that green premium did exist in commercial buildings in UK and US by obtaining their local green certification (LEED or BREEAM). Therefore, it is noteworthy to investigate how the performance of green premium in Hong Kong. The objectives of this research are developed including (1) assess the offices with green certification can outperform with conventional offices in terms of green premium on office rental, (2) explore the Comprehensive Scheme or Selective Scheme under BEAM Plus can provide higher green premium on office rental, and (3) examine the location factor of Central Business District (CBD) can influence the green premium of office rental. This research employs Hedonic Price Model as the major research method to analyze approximately 1,100 office rental transaction records across the selected districts on Hong Kong Island. The data results demonstrate positive influence including (1) green certification on the green premium of office rental price which is 17.9%, (2) green office buildings certificated with the Comprehensive Scheme have a higher green premium of 42.2% than green office buildings certificated with the Selective Scheme, and (3) green office buildings certificated with BEAM Plus located in CBD have a better green premium on office rental by 30.9% compared to those located in non-CBD. These findings demonstrate that BEAM Plus certification can boost office rental prices, with the Comprehensive Scheme yielding the highest green premium. The location factor of the CBD provides valuable insights for green buildings. This research offers theoretical and practical contributions to stakeholders in the built environment sector, guiding policymakers, planners, and investors. By showcasing the benefits of renting green office buildings, it is hoped that Hong Kong will expand its green building initiatives to reduce carbon emissions and address extreme climate challenges in near future.