Effect of property price variations over the recognition of green labelling : empirical evidence from Hong Kong

Abstract

Green building certifications such as BEAM Plus and the Green Building Award have gained prominence for promoting sustainable practices in the real estate sector. However, their economic impact on residential property price remains insufficiently understood. This study seeks to bridge the research gap by exploring the correlation of green building and management certification on property price, price variations across different market segments and districts. Comparison is conducted to assess the relative effectiveness of BEAM Plus and Green Building Award under the locally established accreditation. A hedonic pricing model is employed as the research methodology, analysing over 19,000 transactions within six districts of Hong Kong. The findings confirm that green certifications command a measurable price premium, with a range from 2.79% to 9.13%, while BEAM Plus consistently demonstrating a higher premium than the Green Building Award. The analysis reveals that the premium varies across market segments, with middle-income districts (MID) showing the highest responsiveness, particularly for luxury properties. The study also highlights that green management certifications for existing buildings deliver a notable, albeit smaller, price premium compared to new green buildings. Additionally, the time-sensitive analysis shows that price premiums peak during the medium term after certification but diminish over time as green practices become more normalized in the market. This research carries significant implications for policymakers, real estate sectors, investors and academia. Policymakers are encouraged to introduce targeted incentives for retrofitting existing buildings to expand green management practices. Developers are encouraged to develop luxury properties in middle-income districts to maximise returns on green investments while investing in technologies to minimize the costs for green features. For property management sector, the findings highlight the adoption of green management systems can enhance property value. For investors, the findings highlight the importance of considering both market positioning and timing when targeting green-certified properties for maximum financial returns. Academically, the study provides a foundation for future research on the role of green certifications over the long run.