Empirical results

4.1 The cognition of green label and green feature on sales price

We conducted a questionnaire survey supplemented with illustrative images in March 2013. We ask households to express their cognition of green label / green feature on the sales price and the maintenance cost by "strongly agree", "agree", "neutral", "disagree", and "strongly disagree".

Finally, we got 103 effective questionnaires.

Most of all the people interviewed agreed that green label and green feature will rise up sales price.

There are 72％ respondents agreed with green label would make sales price rising, and 63% for green feature. (See Exhibit 5) It seems to be more recognition of the impact of green label.

Furthermore, we do the Paired-Samples T Test to test the difference between these two. The result showed a significant difference between green label and green feature in the 95% confidence interval. It means the cognition of green label impact on the sales price higher than the one of green feature.

Exhibit 5 Positive cognition of green label/green feature on sales price

Item  strongly 

disagree

disagree neutral  agree  strongly  agree  Green label will make sales price up  0%  7%  21%  53%  19% 

Green feature will make sales price up  0%  5%  32%  50%  13% 

Further, we did a survey to understand the cognition of green feature on sales price and maintenance cost, the impact is scaled from 0 to 9 points where 0 for no effect and 9 for greater impact. The statistical results are shown in Exhibit 6. Those surveyed consider features such as garbage room, garbage freezing facilities and atrium garden having greater impact on sales price; exposed pipework, light steel frame partitioning and permeable paving having less impact on sales price. As for impact on maintenance cost, garbage freezing facilities, atrium garden and garbage room have higher impact; while light steel frame partitioning, exposed pipework, permeable paving and recycled building materials have relatively lower impact. We see respondents believe features that have higher effect on sales price also comes with higher maintenance cost. Though green features raise maintenance cost, most have greater increase for sales price. More than 60 percent of respondents agree that green features will yield higher sales price.

Is there a cognitive different between the impact of sales price and maintenance cost? In the last column of Exhibit 6, the t-value found at 5% significance level, shows significant impact of garbage room, green interior finishing materials, recycle materials, water-efficient appliance and light steel frame partitioning. These green features are built-in upon completion of the structure with low maintenance frequency/cost, long-lived economic facilities; which is in line with existing homebuyer's expectations. Only three cognitions are negative, which are: balcony garden, energy saving lights, exposed pipework. However they are statistically non-significant.

Exhibit 6 Residents’ cognition of green feature Green feature Impact on sales price Impact on

maintenance cost

Impact on sales price and maintenance cost average rank average rank average t-value garbage room 6.09 1 4.98 3 1.107 4.786

Note: t-value shaded indicates significance at the 5% level

4.2 Impact on sales price

4.2.1 Empirical analysis of green label on sales price

Previous result shows the resident’s cognition of green labels and features. How do they impact sales price? Firstly, we add a dummy variable for green label to regression (model 1). The results display in Exhibit 7, which Adjust R² is 0.902. The other building attribute variables beside green label are significant at the 1% level. However, the impact on sales price is not significant if it is green label. Age coefficient is negative while other factors are positive. The time variables, in 2010, 2011 and 2012, were significant and coefficient is positive. The result makes sense.

The total turnover of the study sample ranged between NT$ 2.2 to 34 million, which is fairly wide.

To understand whether there are differences in level of sales price, quantile regression is used. This study is limited to the number of samples; excluding 0.9 components analysis, build only 0.1, 0.25, 0.5 and 0.75 components. Empirical results are shown in Exhibit 7, each of the components of the coefficient of determination were 0.622, 0.654, 0.688 and 0.733. The higher sub bits indicate better fit of the model. Except for q10, most are at 10% level of significance. This result meets expectations, and higher price having greater impact. The green label certification will be able to play a bonus effect. The total price of NT$ 5.7 million is a threshold of providing green building.

Exhibit 7 Empirical result of OLS and Quantile (add green label variable) OLS q10 q25 q50 q75 variable (46 M) (57 M) (70 M) (925 M)

Constant -357.41***

(-9.91)

Adjust R² 0.902 0.622 0.654 0.688 0.733

Note: ∗∗∗ indicates significance at the 1% level; ∗∗ indicates significance at the 5% level;∗ indicates significance at the 10% level.

4.2.2 Empirical analysis of green feature on sales price

In Exhibit 8 we add dummy variables and green features in regression model, which Adjust R² is 0.919. The result of other variables is similar to model 1. Significant variable includes balcony garden, permeable paving, green roof, exposed pipework, light steel frame partitioning and natural interior finishing materials. In descending order for influences, significant negative variable are green roof, balcony garden and permeable paving, which are classified to high maintenance facility.

Their coefficients are -180.112, -75.321 and -36.93.

On the other hand, in descending order the significant positive variable are light steel frame partitioning, natural interior finishing materials, exposed pipework. These are put into the construction period without regular maintenance of facility, which has a positive impact on house prices. Their coefficients are 113.196, 91.874 and 86.45. In other word, people prefer the green feature which has high initial investment costs and low maintenance cost in future economic life.

Exhibit 8 Empirical result of green feature on sales price

variables Coefficients Standardized

Coefficient VIF variable Coefficient Standardized

Coefficient VIF Constant -400.612***

- - permeable

0.056 1.887 infiltration ponds

0.778 1.469 energy saving lights

0.826

0.001 1.994

-42.654 -0.039 2009 -8.159

-0.006 1.883 exposed pipework

86.450***

0.102 2.417

(-.270) -4.342 2010 67.160**

0.064 2.862 light steel frame

113.196***

0.138 2.344

-2.513 -5.985 2011 224.415***

0.248 3.888 recycle materials

-0.046 2.484 water-efficient appliance

0.005 1.494 garbage room -17.764

-0.017 1.612

-0.247 (-.910) balcony

garden

-75.321***

-0.067 2.778 refrigerated garbage

Note: ∗∗∗ indicates significance at the 1% level; ∗∗ indicates significance at the 5% level;∗ indicates significance at the 10% level.

5. Conclusion

If buildings with green labels have effective energy-saving effect, the price would be higher. Our survey shows that people do have this awareness. Since developers would follow the trend for where potential lies, the number of green building should increase. However, not many certified residential green building exist in the market since the promotion of green label in 1999. Empirical results also show that green labels have no significant impact on the sales price. Rationally, appraisers would not include green label as factor effecting valuation of price. This paper further used quantile regression analysis to show that housing in lower price range does not benefit from green building, but green residential in mid or high price range does experience the impact. And impact of green labels would scale with higher housing price.

People generally perceive green features to have positive effect on price. Our empirical research shows that features would have both positive and negative impact on sales prices. Balcony garden, permeable pavement and roof gardens are facilities requiring frequent maintenance and therefore having negative impact on price. On contrary, features with longer economic life and lower

maintenance requirement, such as exposed pipework, light steel frame partitioning and natural building materials, have positive impact on sales prices. In short, ease of management and low expense are key factors in promoting green building. Furthermore, features such as atrium garden and garbage handling area were perceived to have positive impact but was in fact statistically insignificant. The reason was that these features have already been incorporated into the design by developers. In order to promote green buildings, policy makers should view from end-user perspective. Not only should incentive program be provided for newer green building but should also be provided to product developers for better products with less maintenance requirement.

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