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Why pay for sustainable housing? Decomposing the green premium of the residential property market in the Canton of Zurich, Switzerland

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  • Constantin Kempf

    (University of Basel)

  • Juerg Syz

    (University of Zurich)

Abstract

Various studies have shown that green buildings trade at a premium, with estimates of it ranging widely from low single-digits up to 26% for sales values and up to 21% for rents. There is, however, little quantified evidence of why people are willing to pay more for sustainable housing. We investigate the green premium for MINERGIE-certified residential properties in the Canton and City of Zurich, which have among the highest densities of certified green buildings worldwide. Using a comprehensive data set of 17,743 condominiums for sale and 50,075 apartments for rent, we show that the premium can be decomposed and associated with various benefits for owners and tenants. The overall green premia in the canton amount to 2.45% and in the city to 4.91%. From these total premia, 6% (city: insignificant) are attributed to energy savings, 71% (city: 70%) to increased comfort, and 23% (city: 33%) to making the building future proof against regulators and market participants.

Suggested Citation

  • Constantin Kempf & Juerg Syz, 2022. "Why pay for sustainable housing? Decomposing the green premium of the residential property market in the Canton of Zurich, Switzerland," SN Business & Economics, Springer, vol. 2(11), pages 1-39, November.
    • Handle: RePEc:spr:snbeco:v:2:y:2022:i:11:d:10.1007_s43546-022-00346-8
    DOI: 10.1007/s43546-022-00346-8
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    References listed on IDEAS

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