Working Papers

Abstract

Since January of 2005, 250 building projects in the City of Singapore have been awarded the Green Mark for
energy efficiency and sustainability. This paper analyzes the private returns to these investments, evaluating
the premium in asset values they command in the market. We analyze almost 37,000 transactions in the
Singapore housing market to estimate the economic impact of the Green Mark program on Singapore's
residential sector.

We adopt a two-stage research design; in the first stage, a hedonic pricing model is estimated based on
transactions involving green and non-green residential units in 697 individual projects or estates. In the
second stage, the fixed effects estimated for each project are regressed on the location attributes of the
projects, as well as control variables for a Green Mark rating. Our results suggest that the economic returns to
green building are substantial.

This is one of the first analyses of the economics of green building in the residential sector, and the only one
analyzing property markets in Asia. Our results provide insight about the operation of the housing market in
one country, but the policy implications about the economic returns to sustainable investments in the
property market may have broader applications for emerging markets in Asia.

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