Transaction Cost and Agency Perspectives on Eco-Certification of Existing Buildings : A Study of Hong Kong

Yung YAU, Huiying (Cynthia) HOU, Ka Chi YIP, Queena Kun QIAN*

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

3 Citations (Scopus)


Eco-certification schemes are usually launched with various incentives provided by local governments to facilitate green building development and building energy retrofits. A number of barriers to building energy retrofitting have been identified in previous literature, while the barriers to the eco-certification of existing buildings are under-researched. Drawing on a set of building data retrievable from the BEAM Society and other sources, we carried out an analysis and found the building energy retrofitting, as well as the certification process, were unwelcomed in multi-owned residential buildings. The identified shortfall is put forward from the perspectives of transaction cost theory and agency theory. The findings reveal that high transaction costs incurred during negotiations and coordination among a large number of co-owners within a typical apartment building can outweigh the benefits of retrofitting and eco-certification. Besides, the remuneration structure of third-party property management agents discourages agents from facilitating co-owners to initiate retrofitting. This study provides significant implications for policymakers to understand the concerns of building owners and managers over the decisions and the processes of both the building energy retrofits and eco-certification. The problems and barriers unveiled in this study will facilitate the refining of current energy efficiency policies and related incentives designs.
Original languageEnglish
Article number6375
Issue number19
Early online date5 Oct 2021
Publication statusPublished - 5 Oct 2021

Bibliographical note

The data presented in this study come from the BEAM Plus Project Directory & Statistics, which are available on the Hong Kong Green Building Council’s website (, accessed on 21 May 2021).


  • Building energy performance
  • Building energy retrofits
  • Green building certification
  • Transaction costs
  • Agency theory
  • Incentives


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