IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v195y2024ics0301421524004233.html
   My bibliography  Save this article

The spatial dynamics of energy efficiency: EPC impact on retail property values

Author

Listed:
  • Zhang, Jia Jasmine
  • Ward, Hauke
  • Qian, Queena

Abstract

This paper systematically analyzes the effect of energy efficiency on transacted rental and capital values of Dutch retail property assets from 2015–2021. Prior research on Energy Performance Certification (EPC) and energy premiums consistently showed a pricing effect, but recent investigations reveal inconclusive results, particularly when considering non-residential properties. Leveraging a unique dataset of 1015 lease transactions and 478 sale transactions, this study provides one of the first estimates of how EPC labels impact retail value. We utilize ordinary least squares (OLS) regression, considering characteristic retail determinants such as footfall, catchment area type, and retail type, among others. This study finds a premium of 11 percent for rental transactions with Label C or higher on a price per square meter basis. Capital premiums for energy-efficient transactions are more marginal and complex, particularly when accounting for data limitations such as geographic distribution. The nexus between sustainability and financial benefits incentivizes investors and policymakers to embrace energy-efficient measures. Pioneering spatial analyses of EPCs in the retail sector, this paper offers insights for informed policy-making amid geographic variations. In the era of transparency, this research provides empirical evidence to drive responsible investments in energy-efficient retail, shifting from risk management to stakeholder benefits and improved capital efficiency.

Suggested Citation

  • Zhang, Jia Jasmine & Ward, Hauke & Qian, Queena, 2024. "The spatial dynamics of energy efficiency: EPC impact on retail property values," Energy Policy, Elsevier, vol. 195(C).
    • Handle: RePEc:eee:enepol:v:195:y:2024:i:c:s0301421524004233
    DOI: 10.1016/j.enpol.2024.114403
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421524004233
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2024.114403?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Piet Eichholtz & Nils Kok & John M. Quigley, 2013. "The Economics of Green Building," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 50-63, March.
    2. Matheus Koengkan & José Alberto Fuinhas, 2022. "Heterogeneous Effect of “Eco-Friendly” Dwellings on Transaction Prices in Real Estate Market in Portugal," Energies, MDPI, vol. 15(18), pages 1-18, September.
    3. Hardin, William G, III & Wolverton, Marvin L, 2001. "Neighborhood Center Image and Rents," The Journal of Real Estate Finance and Economics, Springer, vol. 23(1), pages 31-46, July.
    4. Francois Des Rosiers & Marius Theriault & Laurent Menetrier, 2005. "Spatial Versus Non-Spatial Determinants of Shopping Center Rents: Modeling Location and Neighborhood-Related Factors," Journal of Real Estate Research, American Real Estate Society, vol. 27(3), pages 293-320.
    5. Pat McAllister & Franz Fuerst & Buki Ekeowa, 2011. "The Impact of Energy Performance Certificates on the Rental and Capital Values of Commercial Property," ERES eres2011_89, European Real Estate Society (ERES).
    6. Hinnells, Mark, 2008. "Technologies to achieve demand reduction and microgeneration in buildings," Energy Policy, Elsevier, vol. 36(12), pages 4427-4433, December.
    7. C.F. Sirmans & Krisandra A. Guidry, 1993. "The Determinants of Shopping Center Rents," Journal of Real Estate Research, American Real Estate Society, vol. 8(1), pages 107-116.
    8. Fuerst, Franz & McAllister, Patrick, 2011. "The impact of Energy Performance Certificates on the rental and capital values of commercial property assets," Energy Policy, Elsevier, vol. 39(10), pages 6608-6614, October.
    9. Ilir Nase & Jim Berry & Alastair Adair, 2013. "Hedonic modelling of high street retail properties: a quality design perspective," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 31(2), pages 160-178, March.
    10. Murphy, Lorraine, 2014. "The influence of the Energy Performance Certificate: The Dutch case," Energy Policy, Elsevier, vol. 67(C), pages 664-672.
    11. repec:arz:wpaper:eres2011-89 is not listed on IDEAS
    12. Akhtyrska, Yana & Fuerst, Franz, 2024. "The effectiveness of climate change regulations in the commercial real estate market," Energy Policy, Elsevier, vol. 185(C).
    13. Norm Miller & Jay Spivey & Andrew Florance, 2008. "Does Green Pay Off?," Journal of Real Estate Portfolio Management, Taylor & Francis Journals, vol. 14(4), pages 385-400, January.
    14. William Hardin & Marvin Wolverton & Jon Carr, 2002. "An Empirical Analysis of Community Center Rents," Journal of Real Estate Research, Taylor & Francis Journals, vol. 23(1-2), pages 163-178, January.
    15. Matheus Koengkan & José Alberto Fuinhas & Anna Auza & Uğur Ursavaş, 2023. "The Impact of Energy Efficiency Regulations on Energy Poverty in Residential Dwellings in the Lisbon Metropolitan Area: An Empirical Investigation," Sustainability, MDPI, vol. 15(5), pages 1-29, February.
    16. Kok, Nils & Jennen, Maarten, 2012. "The impact of energy labels and accessibility on office rents," Energy Policy, Elsevier, vol. 46(C), pages 489-497.
    17. François Rosiers & Marius Thériault & Laurent Ménétrier, 2005. "Spatial Versus Non-Spatial Determinants of Shopping Center Rents: Modeling Location and Neighborhood-Related Factors," Journal of Real Estate Research, Taylor & Francis Journals, vol. 27(3), pages 293-320, January.
    18. Brounen, Dirk & Kok, Nils, 2011. "On the economics of energy labels in the housing market," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 166-179, September.
    19. Matheus Koengkan & José Alberto Fuinhas & Magdalena Radulescu & Emad Kazemzadeh & Nooshin Karimi Alavijeh & Renato Santiago & Mônica Teixeira, 2023. "Assessing the Role of Financial Incentives in Promoting Eco-Friendly Houses in the Lisbon Metropolitan Area—Portugal," Energies, MDPI, vol. 16(4), pages 1-20, February.
    20. Chegut, Andrea & Eichholtz, Piet & Holtermans, Rogier, 2016. "Energy efficiency and economic value in affordable housing," Energy Policy, Elsevier, vol. 97(C), pages 39-49.
    21. Piet Eichholtz & Nils Kok & John M. Quigley, 2010. "Doing Well by Doing Good? Green Office Buildings," American Economic Review, American Economic Association, vol. 100(5), pages 2492-2509, December.
    22. E.C.M. Hui & C.Y. Yiu & Y. Yau, 2007. "Retail properties in Hong Kong: a rental analysis," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 25(2), pages 136-146, March.
    23. Andaloro, Antonio P.F. & Salomone, Roberta & Ioppolo, Giuseppe & Andaloro, Laura, 2010. "Energy certification of buildings: A comparative analysis of progress towards implementation in European countries," Energy Policy, Elsevier, vol. 38(10), pages 5840-5866, October.
    24. Prashant Das & Jonathan A. Wiley, 2014. "Determinants of premia for energy-efficient design in the office market," Journal of Property Research, Taylor & Francis Journals, vol. 31(1), pages 64-86, March.
    25. Michael McCord & Daniel Lo & Peadar Thomas Davis & Lesley Hemphill & John McCord & Martin Haran, 2020. "A spatial analysis of EPCs in The Belfast Metropolitan Area housing market," Journal of Property Research, Taylor & Francis Journals, vol. 37(1), pages 25-61, January.
    26. Franz Fuerst & Jorn van de Wetering, 2015. "How does environmental efficiency impact on the rents of commercial offices in the UK?," Journal of Property Research, Taylor & Francis Journals, vol. 32(3), pages 193-216, September.
    27. Spenser Robinson & Pat McAllister, 2015. "Heterogeneous Price Premiums in Sustainable Real Estate? An Investigation of the Relation between Value and Price Premiums," Journal of Sustainable Real Estate, Taylor & Francis Journals, vol. 7(1), pages 1-20, November.
    28. Ramya R. Aroul & Mauricio Rodriguez, 2017. "The Increasing Value of Green for Residential Real Estate," Journal of Sustainable Real Estate, Taylor & Francis Journals, vol. 9(1), pages 112-130, November.
    29. Luis Mejia & John Benjamin, 2002. "What Do We Know About the Determinants of Shopping Center Sales? Spatial vs. Non-Spatial Factors," Journal of Real Estate Literature, Taylor & Francis Journals, vol. 10(1), pages 1-26, January.
    30. Jonathan Wiley & Justin Benefield & Ken Johnson, 2010. "Green Design and the Market for Commercial Office Space," The Journal of Real Estate Finance and Economics, Springer, vol. 41(2), pages 228-243, August.
    31. Peadar T Davis & John A McCord & Michael McCord & Martin Haran, 2015. "Modelling the effect of energy performance certificate rating on property value in the Belfast housing market," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 8(3), pages 292-317, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Khazal, Aras & Sønstebø, Ole Jakob, 2020. "Valuation of energy performance certificates in the rental market – Professionals vs. nonprofessionals," Energy Policy, Elsevier, vol. 147(C).
    2. Copiello, Sergio, 2017. "Building energy efficiency: A research branch made of paradoxes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 1064-1076.
    3. Benedetto Manganelli & Pierluigi Morano & Francesco Tajani & Francesca Salvo, 2019. "Affordability Assessment of Energy-Efficient Building Construction in Italy," Sustainability, MDPI, vol. 11(1), pages 1-17, January.
    4. Ana Ramos & Alicia Pérez-Alonso & Susana Silva, 2015. "Valuing Energy Performance Certificates in the Portuguese Residential," Working Papers 02-2015, Economics for Energy.
    5. Niina Leskinen & Jussi Vimpari & Seppo Junnila, 2020. "A Review of the Impact of Green Building Certification on the Cash Flows and Values of Commercial Properties," Sustainability, MDPI, vol. 12(7), pages 1-22, March.
    6. Rocco Curto & Elena Fregonara, 2019. "Monitoring and Analysis of the Real Estate Market in a Social Perspective: Results from the Turin’s (Italy) Experience," Sustainability, MDPI, vol. 11(11), pages 1-22, June.
    7. Ramos, A. & Gago, A. & Labandeira, X. & Linares, P., 2015. "The role of information for energy efficiency in the residential sector," Energy Economics, Elsevier, vol. 52(S1), pages 17-29.
    8. Bienert, Sven, . "METASTUDIE :NACHHALTIGKEIT CONTRA RENDITE? Die Implikationen nachhaltigen Wirtschaftens für offene Immobilienfonds am Beispiel der Deka Immobilien Investment GmbH und der WestInvest GmbH," Beiträge zur Immobilienwirtschaft, University of Regensburg, Department of Economics, number 14, August.
    9. Fan, Kwok Yuen & Shen, Jianfu & Hui, Eddie C.M. & Cheng, Louis T.W., 2024. "ESG components and equity returns: Evidence from real estate investment trusts," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    10. Liu, Nan & Zhao, Yuan & Ge, Jiaqi, 2018. "Do renters skimp on energy efficiency during economic recessions? Evidence from Northeast Scotland," Energy, Elsevier, vol. 165(PA), pages 164-175.
    11. Fuerst, Franz & Warren-Myers, Georgia, 2018. "Does voluntary disclosure create a green lemon problem? Energy-efficiency ratings and house prices," Energy Economics, Elsevier, vol. 74(C), pages 1-12.
    12. Fuerst, Franz & McAllister, Patrick & Nanda, Anupam & Wyatt, Peter, 2015. "Does energy efficiency matter to home-buyers? An investigation of EPC ratings and transaction prices in England," Energy Economics, Elsevier, vol. 48(C), pages 145-156.
    13. Lu Zhang & Lennart Stangenberg & Sjors van Wickeren, 2020. "The information value of energy labels: Evidence from the Dutch residential housing market," CPB Discussion Paper 413.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Giraudet, Louis-Gaëtan, 2020. "Energy efficiency as a credence good: A review of informational barriers to energy savings in the building sector," Energy Economics, Elsevier, vol. 87(C).
    15. Lu Zhang & Lennart Stangenberg & Sjors van Wickeren, 2020. "The information value of energy labels: Evidence from the Dutch residential housing market," CPB Discussion Paper 413, CPB Netherlands Bureau for Economic Policy Analysis.
    16. Ankamah-Yeboah, Isaac & Rehdanz, Katrin, 2014. "Explaining the variation in the value of building energy efficiency certificates: A quantitative meta-analysis," Kiel Working Papers 1949, Kiel Institute for the World Economy (IfW Kiel).
    17. Liang Wong, Ing & Krüger, Eduardo, 2017. "Comparing energy efficiency labelling systems in the EU and Brazil: Implications, challenges, barriers and opportunities," Energy Policy, Elsevier, vol. 109(C), pages 310-323.
    18. Sylvain Chareyron, 2024. "The Valuation of Energy Efficiency Labels in the French Housing Market," TEPP Working Paper 2024-05, TEPP.
    19. Odilon Costa & Franz Fuerst & Spenser Robinson & Wesley Mendes-da-Silva, 2017. "Are Green Labels More Valuable in Emerging Real Estate Markets?," LARES lares_2017_paper_5, Latin American Real Estate Society (LARES).
    20. Franke, Melanie & Nadler, Claudia, 2019. "Energy efficiency in the German residential housing market: Its influence on tenants and owners," Energy Policy, Elsevier, vol. 128(C), pages 879-890.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:195:y:2024:i:c:s0301421524004233. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.