The Value of Energy Efficiency and the Role of Expected Heating Costs

Mense, Andreas

doi:10.2139/ssrn.2856157

Cited by 1 publication

(1 citation statement)

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“…However, the existence of a green premium for German housing markets could be generally confirmed. Also, Mense (2016) performed analysis in a comparable direction covering German real estate. However, no clear results on the role of local gas prices or regional climate were identified.…”

Section: Literature Reviewmentioning

confidence: 99%

Does “clean” pay off? Housing markets and their perception of heating technology

Hahn

Hirsch

Bienert

2018

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If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. Purpose -The purpose of this paper is to investigate the role of distinct types of heating technology and their price impact in German residential real estate markets, considering a wide range of other housing market determinants. The authors aim to test and to verify specifically, whether the obsolescence of heating technology leads to a significant price discount and whether higher technological standards (and environmental friendliness) come with a price premium on the market. Design/methodology/approach -The authors create housing market models for rental and sales segments by constructing generalized additive models with explicit multi-layered spatial components.To elaborate a profound and contemporary answer using these models, the authors perform large-sample regression analyses based on more than 400,000 observations covering German residential properties in 2015.Findings -First and foremost, the heating system indeed shows significant explanatory importance for measuring housing rents and purchasing price. Second, the authors find that it makes a difference whether clean "green" technologies are implemented or whether "brown" systems with obsolete technology or fossil energy sources is on hand. Ultimately, the authors conclude that while low energy consumption indeed comes with a price premium, this needs to be interpreted together with the property's heating type, as housing markets seem to outweigh the "green premium" by "brown discounts" if low energy consumption figures are powered by a certain type of heating technology system. Research limitations/implications -Aside of a possible omitted variable bias, the main research limitation is constituted by the integration of asking prices in the analysis, as actual transaction prices are not systematically transparent on national level in Germany. Limitations are discussed at the end of the paper. Practical implications -This work supports investors who face the challenge of making environmental-and energy-related decisions as well as appraisers who deliver financial fundamentals for such. Third, the paper supports both asset managers as well as investment strategists in argumentation pro-environmental investments beyond all e...

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Section: Literature Reviewmentioning

confidence: 99%