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An Analysis of Green and Conventional Buildings in the South African Office Market

Author

Listed:
  • Samuel Azasu
  • Anthony Owusu-Ansah
  • Phillips Leandre

Abstract

The purpose of the study is to examine differences between green and conventional office buildings in specific nodes in Gauteng province in South Africa. The study employs a multiple regression analysis to examine these differences in net rents and operating costs between green and conventional buildings. With the regression model, the log of net rent is expressed as a function of the building classification, the lettable area and the length of the lease expressed in months. With the second model, the log of operating cost is treated as a function of these same independent variables. The results indicate that conventional buildings enjoys a rental premium over green buildings. However, there is cost savings in favour of green buildings compared to conventional buildings. A number of arguments have been advanced to explain these differences. This appears to be the case that the attraction for green buildings currently may be due to cost savings and positive branding advantages from occupying the green building. The rental premium enjoyed by the conventional buildings may be due to locational advantages since most of the properties are located at premium areas.

Suggested Citation

  • Samuel Azasu & Anthony Owusu-Ansah & Phillips Leandre, 2018. "An Analysis of Green and Conventional Buildings in the South African Office Market," ERES eres2018_263, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2018_263
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    More about this item

    Keywords

    Green Buildings; Office Market; South Africa;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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