Green premium as a driver of green-labelled commercial buildings in the developing countries: Lessons from the UK and US

Abstract

Evidence continues to emerge that green-labelled buildings achieve a higher financial return than conventional buildings, both in terms of rent and sale price (referred to as the green premium in the literature). Consequently, the green premium is considered as a potential driver of investment in labelled buildings. However, it is not clear to what extent investors’ expectation of a green premium can help to stimulate the development of green buildings in the developing countries. This study, therefore, assesses the available evidence, as well as trends of property development in the UK and US, as countries with significant concentrations of green-labelled office buildings. The study raises issues that should be considered in adopting the existing empirical findings and presents recommendations for the development of a viable green property market in developing countries.