Economics of sustainable built environment: Case studies in Hong Kong's private housing market

To promote environmental sustainability, eco-labeling of products has been adopted in different industries. Eco-labels are designed as market incentives for the industries to operate in an ecologically sustainable and environmentally friendly manner. In fact, the same also applies to the building industry. Given that housing construction and operations consume a very large amount of energy throughout the world, green or sustainable housing has recently become a new orthodoxy in the field of architecture. There have been different voluntary eco-labels for benchmarking the environmental performance of building products. Yet, it is our general belief that green buildings cost much more to build than traditional buildings. In this regard, a voluntary eco-label system for buildings works only if it can attract a price premium on the labeled buildings. This chapter aims to empirically explore the effects of a voluntary eco-label on property price. Two housing estates certified under the Hong Kong Building Environmental Assessment Method (BEAM) were chosen for case studies. Hedonic price analyses were carried out to look for price differentials between labeled and non-labeled properties, keeping other things constant. The findings of this chapter can offer valuable insights for the real estate and construction industry and policy makers into how to promote a sustainable built environment in Hong Kong.