Risk and Return of Green Buildings—Equally Low Vacancies and Higher Rents in MINERGIE-Certified Apartments in Switzerland
Constantin Kempf
What the paper says
This study examines whether MINERGIE-certified multifamily houses exhibit higher occupancies in Switzerland; that is, better rentability and less risk. Various studies have shown that green buildings exhibit higher rents and sales prices than conventional properties. However, a risk–return-conscious investor needs to consider both dimensions. Thus far, little empirical research has been conducted concerning the risk side; that is, the occupancies of green residential buildings. This study estimates rents and occupancies in a structural simultaneous equation system. The regression results show robust estimates for the two-stage least squares instrumental variables approach and the ordinary least squares regressions. The hedonic regression results reveal no statistically significant effect on occupancies, though they show a green rent premium of approximately 3% to 5%. Against the background of a lessor market with demand exceeding supply, the advantages of a MINERGIE-certified house—that is, lower energy costs and better living quality and comfort—yield an increased willingness to pay. Given the excess demand in the Swiss housing market, no green risk-mitigating advantages in rentability—that is, an increased occupancy premium—could be identified.
1 citation
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.10 × 0.4 = 0.04 |
| M · momentum | 0.53 × 0.15 = 0.08 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.