Construction Costs and Initial Yield Effects of MINERGIE Certification and Sustainable Construction Measures in New Multifamily Houses in Switzerland

Constantin Kempf

doi:10.1080/19498276.2023.2180835

Kempf, Constantin

2023-12-31 00:00:00

JOURNAL OF SUSTAINABLE REAL ESTATE 2023, VOL. 15, NO. 1, 2180835 ARES https://doi.org/10.1080/19498276.2023.2180835 American Real Estate Society Construction Costs and Initial Yield Effects of MINERGIE Certification and Sustainable Construction Measures in New Multifamily Houses in Switzerland Constantin Kempf Faculty of Business and Economics, University of Basel, Basel, Switzerland ABSTRACT ARTICLE HISTORY Received 21 October 2022 In this study, the influence of MINERGIE certifications, sustainable building measures that Revised 6 January 2023 lead to certification, and further amenities and quality measures not compulsory for certifi- Accepted 19 January 2023 cation on the construction costs and net initial (asking) rents of building projects in Switzerland is investigated. The hedonic regression results show construction cost premiums KEYWORDS of 1.6–5.1% for MINERGIE-certified apartments. These cost premiums yield higher net initial Green buildings; green rent rents of approximately 2.6–6.6 %( not significant). In contrast, most specific sustainable and cost premiums; building measures, such as district heating, heat pumps, or solar energy, show significant hedonic regression; cost premiums, without higher net initial rents in the market. Whereas MINERGIE certifica- MINERGIE tion can translate construction costs to higher net initial rents, single sustainable construc- tion measures do not. Such an adverse cost-benefit ratio could impede specific green investments in the short term, whereas a favorable ratio of the MINERGIE standard could promote the spread of green buildings. Introduction urgent need for further research in the real estate sector. According to the Global Alliance for Buildings and Ultimately, regulation could set rules for greater Construction, International Energy Agency and sustainability in buildings. One example is the United Nations Environment Programme (2019), the European Green Deal, with its goal of enhancing the real estate industry and its buildings accounted for energy performance of buildings and helping to reach 36% of final energy use and 39% of energy and pro- building and renovation goals. For this purpose, the cess-related carbon dioxide (CO ) emissions in 2018. European Union has established a legislative frame- The real estate sector thus plays a crucial role in real- work that includes the “Energy Performance of izing sustainable and resource-efficient global eco- Buildings Directive” (EPBD) 2010/31/EU. Energy nomic development. The Swiss Federal Office of Performance Certificates (EPCs) and inspections of Energy (SFOE, 2020) summarized the impact of build- heating and cooling systems are crucial instruments of ing stock on Switzerland’s environment as follows: the EPBD (European Commission, 2022) and have “Today, approximately 50% of Switzerland’s primary inspired research on the topic. Nevertheless, the ques- energy consumption is spent on buildings, 30% for tion remains: are there economic incentives to go heating, air conditioning, and hot water, 14% for elec- green? That is, are there financial arguments that tricity, and approximately 6% for manufacturing and explain why investors should build sustainably? In the maintenance. Exploiting the still considerable savings last quarter of 2021, oil, gas, and energy prices surged. potential in the building sector is of great economic Energy-intense industries, owners of fuel-based car, interest. Moreover, the building sector is also substan- and inhabitants of fossil-heated housing experienced tially responsible for the consumption of material high costs. However, producers and consumers who resources, waste generation, and the environmental impact on our society.” There is an ecological neces- invested early in clean technology experienced more sity for sustainable building methods, highlighting the stable energy prices. The presumed higher up-front CONTACT Constantin Kempf constantin.kempf@unibas.ch Faculty of Business and Economics, University of Basel, Peter Merian-Weg 6, 4052 Basel, Switzerland. 2023 The Author(s). Published with license by Taylor & Francis Group, LLC This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent. 2 C. KEMPF costs of cleaner technology appeared to pay off or is, revenue. Studies by Feige et al. (2013), Marty et al. provide a buffer against increasing fossil energy prices. (2016), Marty and Meins (2017), Salvi et al. (2008), Nevertheless, the cost-benefit ratio of green residential € Salvi et al. (2010), and Schuster and Fuss (2016) indi- buildings remains unclear in the real estate sector. cated the existence of green rent and price premiums This raises the question: will sustainable construction in the range of 1.78–12% for MINERGIE-certified measures appear beneficial to investors due to higher buildings in the Swiss residential market. The primary earnings? drivers of these higher rental and sales prices include According to Dwaikat and Ali (2016), there is a increased quality of living, greater comfort, lower consensus about the benefits associated with green energy costs, and improved property value retention buildings. However, there is ongoing debate compar- (MINERGIE, 2020). Furthermore, globally, studies by ing the costs of green and conventional construction Bond and Devine (2015), Cajias et al. (2019), and methods. This study examines whether green build- Koirala et al. (2014) showed green rental and sales ings—that is, buildings with sustainable building premiums of 1.4–23.25%, according to international measures and components—and those holding sustainability standards. Therefore, there is consensus MINERGIE certification incur higher construction in the literature that certified buildings have a positive costs and yield higher net initial (asking) rents than effect on rents and sales. conventional buildings when first put on the market According to Dwaikat and Ali (2016), owners and after construction. Additionally, it examines the cost investors often perceive sustainable buildings as being of and return to certification and that of underlying expensive, which is cited as the primary reason for the components that lead to certification, as well as that lower market penetration of green buildings. Most of amenities and quality characteristics, which are typ- studies on construction cost premiums have examined ically independent of certification status. the commercial sector, whereas the residential market Associating the construction data on building costs has scarcely been studied. Overall, the literature on with listing information allows an estimate of the the construction costs of sustainable buildings com- costs and benefits of green versus nongreen construc- pared to conventional buildings identified three differ- tion and how certification itself and its underlying ent cases. First, studies by Kaplan et al. (2009), technology impact costs and yields. Matthiessen and Morris (2007), and Rehm and Ade To assess the cost-benefit ratio of sustainable meas- (2013) identified no significant cost differences in the ures, a comparison of potentially higher returns, in the construction of sustainable and conventional build- form of net rents, and upstream construction costs can ings. Second, studies by Ade and Rehm (2020), be considered. Zhang et al. (2018) describe green build- Galuppo and Tu (2010), Kim et al. (2014), Shrestha ing development as a complex process involving vari- and Pushpala (2012), Zhang et al. (2011), and Kats ous stakeholders throughout the building life cycle. et al. (2003) revealed higher costs for constructing They analyzed the costs and benefits of green buildings sustainable buildings. Third, Lucuik et al. (2005) and from the perspective of the two primary decision-mak- Hydes and Creech (2010) found lower costs for con- ers: developers and occupants. The division of costs structing sustainable buildings. and benefits between them may lead to a split incentive In contrast to the predominantly positive benefits and principal-agent problem (Fuerst et al., 2016, and of sustainable building labels on rents and prices, the Jaffe & Stavins, 1994, as cited in Zhang et al., 2018). cost effects of green-certified real estate are ambigu- For instance, construction costs are borne by develop- ous. Based on these gaps in the existing literature, this ers, whereas occupants enjoy some of the benefits of study addresses the following hypotheses: in living green. Zhang et al. (2018) argue that sustainable Switzerland, (I) sustainable residential properties are practices will prevail only when all stakeholders benefit associated with higher construction costs and (II) from the cost-benefit ratio of “going green.” higher initial rental income is obtained compared to Based on these considerations, this analysis focuses conventional properties. By testing these hypotheses, it on the perspective of developers or investors. This is possible to assess the advantages and disadvantages raises the question: do green construction cost premi- of green building measures and certifications. This ums exist during the design and construction phase? study examines whether green investments yield, in Furthermore, it examines whether green measures general, a favorable cost-benefit ratio. Further, it yield higher net initial rents for investors (Figure 1). Sustainable housing research in Switzerland has examines the situation thoroughly to understand the focused on analyzing rent and price premiums, that effects of the costs and yields of certification and the JOURNAL OF SUSTAINABLE REAL ESTATE 3 Price premium as sum of net rent premiums Legend: Perspective of building life cycle: Beneﬁts Costs Perspective of market participants: Beneﬁts Costs Economic viability Economic viability from the from the perspective perspective of of occupants / tenants developers / investors Net rent premium through: -Lower operating costs (tangible) -Increased comfort, health, and (II) Net initial rent premium productivity (intangible) -Enhanced corporate reputation / (II) image (intangible) Building life cycle stages (I) Construction cost premium through: Construction -Costs of green materials, sustainable cost premium heating systems, etc. (tangible) -Costs of green certiﬁcation, simulation, adapting existing processes (intangible) Design & Construction Sale / Tenancy Operation Refurbishment (or Demolition) Figure 1. (I) Construction cost premium vs. (II) Net initial rent premium based on Zhang et al. (2018). underlying building measures that lead to analysis reveals the cost and rent premiums from the certification. construction measure perspective as well as from the This study examines “greenness” in two ways. First, certification perspective. Furthermore, the study con- the analysis distinguishes between individual (green) trols for amenity and quality measures that are inde- construction components and measures that lead to pendent from certification status, such as green certification—that is, technology controls such as non- roofing, wood windows, or elevators. fossil heating systems, MINERGIE standard roofing, For this purpose, a new data set was assembled. fac¸ade, windows, insulation, and controlled room ven- The data include detailed information on construction tilation/comfort ventilation. For example, the analysis projects, including costs, and are linked with first- compares the construction costs and net initial rents time listing data of the newly constructed dwellings. of clean technology such as geothermal energy, which This unique database is then enriched with informa- is in line with the certification standard, against con- tion on the existence of MINERGIE certifications. ventional fossil-based heating, for which certification Based on these data, it is possible to estimate the is not allowed. Second, hedonic regression specifica- influence of environmental technology investments tions include whether a project was certified according that lead to certification and MINERGIE certification to a certain MINERGIE standard or not. Thus, the itself on construction costs and net initial rents. study addresses whether premiums on construction Comparing the significance and direction of these costs and net rents can be ascribed to a MINERGIE influences allows a deeper understanding of the costs certification, which requires a bundle of sustainable and yields of certification, including the underlying characteristics (MINERGIE, 2022). Therefore, the components. Additionally, the analysis provides 4 C. KEMPF insight into the assessment of the cost-benefit ratio of label requirements, such as high-energy efficiency and specific green construction measures and certification. comfort ventilation, impacted rental rates, albeit not Moreover, this study analyzes whether a higher will- significantly. This contradicts earlier studies consider- ing MINERGIE rent premium impacts. However, ear- ingness to pay (WTP) for green construction origi- nates from green construction practices or only from lier studies on MINERGIE rent premiums did not certification. distinguish between the different dimensions of sus- tainability. Marty and Meins (2017) analyzed the impact of sustainability features on the existing rents Literature on Green Construction Costs and of 3,120 apartments with respect to the ESI rating. Rent Premiums The study concluded that health and comfort and This section reviews relevant publications on green location and mobility showed the highest positive rent and cost premiums in Switzerland and globally, effect on net rental income. Additionally, they identi- focusing on the residential real estate market. fied a rental discount for flexibility and heating demand. Thus, Switzerland-based studies on rent and price Swiss Studies on Green Rent Premiums premiums of sustainable residential real estate identi- In Switzerland, studies typically define green buildings fied significantly positive single-digit markups. based on certain standards such as MINERGIE, SNBS, MuKEn, and SGNI; ratings such as GEAK and ESI; or International Studies on Green Rent Premiums guidelines such as SIA 112/1, SIA 2040, and NUWEL (Meins, 2014). Most studies that examine a green The two predominant international green building price or rent premium compare MINERGIE buildings labels, LEED and BREEAM, primarily certify commer- to noncertified controls. cial and nonresidential buildings, so most global stud- In 2008, Salvi et al. analyzed 9,000 real estate trans- ies have focused on the green rent premiums in the actions in the canton of Zurich between 1998 and commercial sector, whereas studies on the residential 2008. Two hundred fifty properties were MINERGIE market have been limited. The following section sum- certified and included a green sales price premium of marizes global studies on green rent premiums in the 7% for single-family houses and 3.5% for condomini- residential sector. ums. Therefore, the price premium for MINERGIE- Fuerst and Dalton (2019) conducted a meta- certified buildings could partially compensate for the analysis of 42 international studies that examined maximum additional costs of 10% prescribed by the the effect of sustainability on rent and sales prices in MINERGIE association. Salvi et al. (2010) identified the residential and commercial property markets. net rental premiums for MINERGIE-certified proper- Overall, they reported an average rent premium of ties of 6.0% for Switzerland and 6.2% for the canton 6% and a sales premium of 7.6%. They identified an of Zurich. Schuster and Fuss € (2016) also identified a average rent premium of 8.2% in the residential positive net rental premium of 1.78% for MINERGIE market. According to the authors, most studies (19 residential properties based on 130,591 rental outof 22) on green rentpremiums showed a posi- contracts. tive rent effect. Only the studies of Fuerst and Feige et al. (2013) examined 2,500 residential prop- McAllister (2011), Gabe and Rehm (2014), and erties in Switzerland using the five sustainability crite- Zheng et al. (2012) reported absent or negative rent ria of the Economic Sustainability Indicator (ESI): (1) premiums. flexibility and polyvalence; (2) energy and water con- Studies by Cajias and Piazolo (2013), Cajias et al. sumption; (3) location and mobility; (4) safety; and (2019), Dressler et al. (2017), and Hyland et al. (5) health and comfort. They found statistically sig- (2013) examined the effects of EPCs and Building nificant higher rental premiums for building charac- Energy Rating (BER) on rents and sales prices. teristics that enhanced water efficiency, health and Cajias and Piazolo (2013) used a large panel of comfort level, and the safety and security of buildings. German residential buildings to analyze the effect of Marty et al. (2016) analyzed rental rates based on a energy consumption levels on total return and rent similar framework used by Feige et al. (2013). Their prices. They showed that energy-efficient buildings analysis revealed that all criteria except flexibility and (EPC1) exhibited a 0.76 EUR/m higher rent than polyvalence positively impacted rental rates. inefficient buildings (EPC8). Additionally, the ana- Furthermore, they found that explicit MINERGIE lysis showed a positive effect of 0.015% total return JOURNAL OF SUSTAINABLE REAL ESTATE 5 for a 1% reductioninenergy consumption. They calculated a net implicit price (or net marginal Furthermore, it showed that the market value and effect) for these building codes of approximately US$ rent prices increased by 0.45 and 0.08%, respectively, 140.87 per month in 2006. However, this estimated for a 1% increase in energy efficiency, while holding effect varied significantly by region, energy type, and all other variables constant (ceteris paribus). In a rent gradient. later study, Cajias et al. (2019)examined the influ- In addition to differentiating between certified ence of EPCs on rental values. They developed buildings and their noncertified counterparts, some hedonic regression models with a sample of 760,000 studies considered other energy-efficient features and observations from 403 local markets in Germany. sustainable measures in their analysis. Im et al. (2017) analyzed more than 159,000 rental property listings, They identified evidence that energy-efficient rental units showed a rental premium and concluded that a their attributes, and energy efficiency measures from landlord who improves the EPC rating from D to A 10 cities in the US. Using the propensity score match- could expect an increase of 1.4% in rent. ing and conditional mean comparison methods, they Additionally, they identified shorter marketing peri- analyzed the impact of energy-efficient features on rents in each city. The authors identified energy effi- ods of energy-efficient dwellings. Dressler et al. (2017) estimated the effect of EPCs on rents using ciency premiums for apartment rental units ranging rental advertisements from 2010–2014 in the from 3.2% in Indianapolis to 16.1% in Atlanta. For Brussels residential rental market. They found rent single-family units, they generally identified even premiums of 6.8 and 1.9% for green (ABC) and higher rental premiums. A study by Fuerst and Warren-Myers (2018)on orange (DE) EPC ratings, respectively, compared to the reference of red (FG) EPC ratings. They con- sale and lease transactions during 2011–2016 in the cluded that highly energy-efficient dwellings earned Australian Capital Territory revealed that the a rent premium, provided EPCs were disclosed. This reported energy-efficiency ratings (EER) and other premium might incentivize investments in energy sustainability-related characteristics influenced the pricing of sales and rental transactions in the resi- efficiency. Additionally, dwellings with mediocre energy performance were penalized for disclosing an dential market. For instance, they found a rental pre- EPC, which might provide a strategic motivation to mium of 3.5% associated with 5-star rated dwellings conceal energy performance. Hyland et al. (2013) compared to the reference of 3-star rated properties. The 6-, 7-, and 8–10-star rated properties showed estimated the effect of energy efficiency on rents and 3.6, 2.6, and 3.5% markups, respectively. property values based on listings from 2008 to 2012 in Ireland, where the BER was adopted following the Additionally, the results indicated rent premiums for EU’s EPBD. They found larger premiums for prop- systems that did not belong to the formal rating erty sales compared to rentals. In the rental market, assessment, such as solar photovoltaics (4.8–5.4%) and heating and cooling systems (e.g., reverse cycle A-rated properties had 1.8% higher rents, and coun- terintuitively, B-rated properties had 3.9% higher heating with 1.3–7.7% rental premiums). They con- rents than the reference category of D-rated proper- cluded that the reported energy-efficiency level and ties. Lower energy ratings E, F, and G received 1.9, otherattributes that wereoutside theformal assess- 3.2, and 2.3% lower rents than D-rated properties. ment were significantly reflected in rents and sales In the US, Bond and Devine (2015) identified an prices, as tenants and buyers estimated their expected 8.9% rent premium for LEED multifamily rental utility charges based on the EER. apartments. Additionally, they found the first indica- Hahn et al. (2018) examined the impact of distinct tion that LEED certification resulted in an additional types of heating technology on prices and rents in markup over noncertified apartments that were adver- German residential real estate markets. They studied tised as being green (9.1 and 4.7%, for LEED and whether the obsolescence of heating technology noncertified buildings, respectively). Therefore, the resulted in a significant decrease in price and whether results showed that LEED certification is more con- the use of more advanced (and more environmentally vincing to tenants than an open statement regarding friendly) heating systems led to a price premium in property greenness. Another US study from Koirala the market. The authors divided the heating technolo- et al. (2014) estimated that energy-efficient building gies into three groups: green (e.g., combined heat and codes increased monthly housing rents by 23.25%. power unit, wood pellet heating, thermal solar heating, The building codes compensated for the higher rents and thermal heat pumps), standard (e.g., central heat- by a 6.47% reduction in monthly energy expenditures. ing technology, underfloor heating, gas-fueled heating, 6 C. KEMPF and nonprogressive or conventional heating technol- 2.8% for MINERGIE and 6.9% for MINERGIE-P, ogy), and brown (e.g., room-based heating, oven heat- depending on the building standard. The MINERGIE (2020) association and Wegner ing technology, oil-fueled heating of any appliance). et al. (2010) conclude that sustainable construction in Their regression analysis on more than 400,000 obser- Switzerland is associated with increased construction vations, covering German residential properties in costs in single-digit percentages. 2015, revealed a premium of 3% on sales and 2.4% on rents for green technologies over standard technolo- gies (reference category). Additionally, they reported a International Studies on Green Cost Premiums brown discount of 4.2% for sales and 2.4% for rents Ade and Rehm (2020) identified three types of for properties that explicitly advertised conventional research on cost premiums in both the residential and heating technologies, which are obsolete, compared to commercial property markets. First, qualitative surveys standard technologies. were conducted by perception studies of industry pro- In summary, the global literature on green rent fessionals (Hwang et al., 2017; Turner Construction premiums shows that the market rewards energy-effi- Company, 2005, as cited in World Green Building cient and certified residential properties with a green Council, 2013). Second is the quantitative analysis of positive markup ranging from 1.4% to 23.25% case study dwellings (Ade, 2018; Kim et al., 2014). (Table 1). Third, the least represented approach is the quantita- tive analysis of actual capital construction costs of Swiss Studies on Green Cost Premiums residential dwellings (Ade & Rehm, 2020; Kaplan et al., 2009). This section and the one that follows focus on cost Hwang et al. (2017) conducted a survey-based premiums in the residential market and are based pri- study of the cost premiums and cost performance of marily on the literature reviews provided by Ade and green building projects in Singapore. Most respond- Rehm (2020), Dwaikat and Ali (2016), and Zhang ents perceived green cost premiums to be between 5 et al. (2018). and 10%, with green residential buildings exhibiting In Switzerland, studies on green cost premiums the highest additional costs, followed by green com- are scarce. Wegner et al. (2010)studied whether a mercial and office buildings. These results agreed with MINERGIE-P certification in a multi- and single- the green building barometer published by the Turner family house incurred additional costs. For these two Construction Company (2005). The authors reported MINERGIE-P–certified buildings, they simulated that experienced building professionals believed the conventional twin buildings. Furthermore, they com- cost increase to be up to 13%. In contrast, inexperi- pared the conventional twin with its energy-efficient enced professionals believed the cost markup to be up MINERGIE counterpart. The additional construction to 18%. The study showed that, whereas a lack of costs of a MINERGIE-P–certified building were experience did increase the perceived cost premiums between 5 and 14% of the total construction costs. of green buildings, even experienced professionals The study revealed that the cost premium was pri- tended to overestimate the additional costs. marily due to the additional construction costs and Ade and Rehm (2020) analyzed the actual capital that certification fees played only a minor role. construction costs of 718 newly built single-family Moreover, only about one-third of the additional homes in Auckland, New Zealand. Owing to the sen- construction costs can be compensated by energy sitive nature of property-level construction data, their cost savings. study is the first to use hedonic cost modeling to ana- The MINERGIE (2011) association requires that lyze actual construction costs of single-family homes. the cost premium not exceed 10% for the MINERGIE The study identified a 12% cost premium for 6- standard, 15% for the stricter MINERGIE-P standard, Homestar certification, comprising 11% hard cost pre- and no limits for the most energy-efficient mium and 1% additional soft costs. MINERGIE-A standard. Calculations of the In an earlier study, Ade (2018) simulated the modi- MINERGIE (2020) association show that the add- fications that would be required for 10 building code– itional investment costs of a multifamily house with compliant stand-alone and terraced residential houses three residential units compared to a building con- in the Auckland region to achieve a Homestar rating structed according to the Mustervorschriften der of 6–10. The study identified a wide range of results Kantone im Energiebereich (MuKEn14) is between across the different house designs, with cost premiums JOURNAL OF SUSTAINABLE REAL ESTATE 7 Table 1. Literature on green rent premiums in the residential market. Study Market Label Estimated green premium Interpretation/Findings Switzerland-based studies Feige et al. (2013) Residential properties ESI Positive premiums for water efficiency, health and Positive premiums for a set of (Switzerland) comfort level, and building safety and security from sustainability dimensions about 9–12% Marty et al. (2016) Residential properties ESI All ESI sustainability criteria, excepting flexibility and MINERGIE’s minimal energy efficiency (Switzerland) polyvalence, exert positive impact on rents. standard and comfort ventilation MINERGIE requirements do not exert no significant impact on rents Marty and Meins (2017) Residential properties ESI Significant positive effect of health and comfort (i.e., Health and comfort as (Switzerland) inside air quality, low noise important drivers exposure, sufficient natural light), whereas thermal heat usage shows negative sign, indicating negative impact on net rents Salvi et al. (2008) Residential properties MINERGIE 3.5% (Sales prices for apartments) General existence of a sales premium (Switzerland) 7.0% (Sales prices for single-family homes) Salvi et al. (2010) Residential properties MINERGIE 6.0% (Rents for Switzerland) General existence of a rent premium (Switzerland) 6.2% (Rents for the canton of Zurich) Schuster and Fuss (2016) Residential and MINERGIE 1.78% (Net rent premium for residential) General existence of a rent premium commercial buildings 13.2% (Net rent premium for commercial) (Switzerland) International studies Bond and Devine (2015) Residential LEED 8.9% Rent premium for LEED multifamily rental Additional premium for LEED (8.9%) (US) apartments compared to noncertified, advertised as being green (4.7%) Cajias and Piazolo (2013) Residential Energy performance Rent difference between low (EPC1) and high (EPC8) Energy-efficient buildings yield (Germany) Certificate (EPC) consumption: 0.76 EUR /m higher returns and rents than inefficient buildings Cajias et al. (2019) Residential Energy Performance 1.4% Rent premium for rating A compared to Energy-efficient buildings (Germany) Certificate (EPC) standard D show a rental premium and shorter marketing periods Dressler et al. (2017) Residential Energy Performance 6.8% For green (ABC) EPC, 1.9% for orange (DE) EPC Energy efficiency and (Belgium) Certificate (EPC) compared to red (FG) EPC rating (reference category) information effect Fuerst and Warren-Myers Residential Energy-efficiency 3.5, 3.6, 2.6, and 3.5% rent premium of 5-, 6-, 7-, and Reported energy-efficiency level (2018) (Australia) ratings (EER) 8–10-star and other “green” attributes compared to 3-star rated properties (reference) are reflected in rents and sales Fuerst and Dalton (2019) Residential & Various Overall market: 6% rent and 7.6% sales premium 19 out of 22 studies find Commercial Residential market: 8.3% average rent premium a positive rent effect (International) Hahn et al. (2018) Residential Distinct types of heating Green premium: 3% sales and 2.4% rent Effect of heating technologies (Germany) technology Brown discount: 4.2% sales and 2.4% rent on rents and sales (Green, Standard & Brown) Hyland et al. (2013) Residential Building Energy Rent premium of 1.8% for A- and 3.9% for Energy efficiency has a positive (Ireland) Rating (BER) B-rated compared to reference category effect on sales and rental prices. D-rated properties. Rent discount for E, F, and G of Effect on sales is stronger than –1.9, –3.2, and –2.3% on rents Im et al. (2017) Residential Analysis of key phrases Energy efficiency premiums for apartment rental units Impact of energy-efficient (US) in listing text ranging from –3.2% in Indianapolis to 16.1% in features on rents in each city Atlanta Koirala et al. (2014) Residential International Energy Building codes increase monthly housing rents by Energy-efficient building codes (US) Conservation Code (IECC) 23.25% and compensate higher rents by a 6.47% increase rents and decrease reduction in monthly energy expenditures household energy expenditures Source: Author’ representation. 8 C. KEMPF from 3 to 26%. Ade concluded that the case study Chinese Green Building Label (CGBL): 1.0% for 1- results from a single dwelling were not representative star, 2.9% for 2-star, and 5.4% for 3-star. Yip et al. of a broader sample. (2013) identified less distinct but similar ranges of The analysis by Kim et al. (2014) showed that resi- cost premiums for residential buildings with a CGBL: dential projects with a green building code in 0.0–7.5% for 1-star, 0.9–2.6% for 2-star, and 0.5–7.0% California, incorporating green building features such for 3-star. as energy-efficient appliances, equipment, and light- An extensive cost study of the commercial real ing, increased construction costs by 10.77%, compared estate sector in the UK from Chegut et al. (2019) to a traditional building. Going green required only found that the average marginal cost of green-labeled two additional working days. Their results can be construction projects was smaller than the price pre- used to broadly evaluate the initial financial invest- miums found in the literature. The authors examined ment in a project and compare the benefits of energy a sample of 336 green buildings and 2,060 conven- cost savings throughout the building life cycle. tional buildings between 2003 and 2014. On average, Kaplan et al. (2009) compared the costs of 15 the study found a construction cost premium of LEED residential new construction projects with 22 6.5%—decreasing with the environmental BREEAM non-LEED projects. They concluded that the differ- ratings. Buildings with BREEAM ratings of Very ence between the LEED and non-LEED samples was Good, Excellent, and Outstanding were built at a probably due to natural variations in the population. higher cost compared to conventional constructions, Student’s t-test showed no statistically significant cost whereas those with BREEAM Pass or Good ratings difference between the LEED and non-LEED samples. showed no cost markup. Additionally, the study found Burnett et al. (2008) examined the costs and finan- that buildings certified as green exhibit on average an cial benefits of office and residential buildings certified 11% longer construction project duration. as green under the Hong Kong Building The literature on residential properties showed cost Environmental Assessment Method (HK-BEAM). The premiums ranging from 0 to 26%, whereas none of authors reported a minimum total construction cost the studies reported statistically significant cost dis- premiums of approximately 0–4%, depending on the counts. Only Kaplan et al. (2009) failed to find a stat- certification performance grade achieved. The costs of istically significant green cost premium. The green financing, additional design time and fees, and certifi- cost premiums appeared to increase with the level of cation fees were not considered. Residential buildings certification. with an HK-BEAM 4 Silver, Gold, and Platinum certi- Interestingly, only Ade and Rehm (2020) and fication had construction cost premiums of 0.8, 1.7, Kaplan et al. (2009) performed quantitative analyses and 3.4%, respectively. According to Burnett et al. to examine the green cost premium in the residential (2008), it would not be appropriate to extrapolate real estate market. However, other than Kaplan et al. these estimates to a particular development, given the (2009), the author knows of no extensive analysis of variability of site conditions, building scale, and multifamily houses and their green construction costs. design and data quality. Nonetheless, these cost pre- According to Ade and Rehm (2020), the lack of quan- miums could be perceived as representative and indi- titative research is due to the limited accessibility of cative of green building stock in Hong Kong. construction cost information. These data typically Glossner et al. (2015) studied the additional costs remain with the original developer or landlord and of LEED-certified single-family homes in Kentucky by are therefore not readily available (Table 2). communicating with LEED professionals and home building organizations. The study reported premiums Methodology and Model Description of 4, 7, 10, and 13% for LEED Certified, Silver, Gold, and Platinum, respectively—that is, construction costs In a hedonic regression model, the construction 2 2 costs/m and net initial rents/m (asking data) of mul- rose with increasing levels of certification. Zhang et al. (2018) summarized two Chinese stud- tifamily apartments are regressed on their structural ies from MOHURD of China (2015) and Yip et al. attributes, location, and time controls. The results of (2013). Both studies reported incremental cost premi- the hedonic regressions identified the effects of differ- ums in RMB/m , which were converted to percentages ent green and conventional building measures on the using the construction costs of ordinary residential costs and expected earnings. Additionally, by includ- buildings (2,250 RMB/m ). MOHURD of China ing information about whether a building is certified (2015) reported incremental costs based on the according to MINERGIE or not, it is possible to JOURNAL OF SUSTAINABLE REAL ESTATE 9 Table 2. Literature on green cost premiums in the residential market. Study Market Label Estimated green cost premium Interpretation/Findings Swiss studies Wegner et al. (2010) Residential MINERGIE-P 5–14% Cost premium About one-third of the cost premium (Switzerland) can be compensated by energy cost savings MINERGIE (2011) Residential MINERGIE MINERGIE association requires a maximum of: MINERGIE association defines these (Switzerland) 10% cost premium for MINERGIE (standard cost premium barriers certification) 15% cost premium for MINERGIE-P none for MINERGIE-A MINERGIE (2020) Residential MINERGIE MINERGIE vs. MuKEn14: 2.8% cost premium MINERGIE with slightly higher costs (Switzerland) MINERGIE-P vs. MuKEn: 6.9% cost premium compared to MuKEn International studies Ade (2018) Residential 6 to 10-Homestar v4 Cost premiums varied from 3 to 26% Theoretical analysis on 10 dwellings— (New Zealand) cost premiums vary across house designs Ade and Rehm (2020) Residential 6-Homestar 12% Cost premium for 6-Homestar First hedonic modeling of (New Zealand) certification certification actual construction costs of 11% Hard cost premium and 1% in single-family homes additional soft costs Burnett et al. (2008) Residentital HK-BEAM Platinum: 3.4%, Gold: 1.7%, Silver: 0.8% Indicative green cost premiums (HKSAR, China) between 0 and 4% Glossner et al. (2015) Residential LEED (single- Platinum: 13%, Gold: 10%, Silver: 7%, Insights from LEED professionals (US) family home) Certified: 4% and LEED homebuilding organizations Hwang et al. (2017) Office, Commercial Green Mark Mean of green cost premiums residential Perceived green cost premium & Residential 4.3–12.5% around 5–10% (Singapore) Kaplan et al. (2009) Residential LEED No statistically significant cost premium No cost difference found (US) Kim et al. (2014) Residential Green Building Single-family residential building cost premium Construction cost increase (US) Code of as a result of implementing 10.77% to implement new building code in green features California MOHURD of China (2015)as Residential CGBL 3-Star: 5.4%, 2-Star: 2.9%, 1-Star: 1.0% Study not available reported by Zhang et al. (2018) (China) Turner Construction Company Residential Undisclosed Building professionals with and without Lack of experience tends to (2005) in World Green Building experience in constructing green buildings overestimate green cost premium Council (2013) believe the cost premiums to be up to 13 and 18% Yip (2013) as reported by Zhang Residential CGBL 3-Star: 0.5–7.0%, 2-Star: 0.9–2.6%, Study not available et al. (2018) (China) 1-Star: 0.0–7.5% Source: Author’s representation. 10 C. KEMPF distinguish between effective sustainable building linked to listing data of first-time lettings in measures that lead to certification (e.g., heat pumps Switzerland. Finally, the author enriched these data versus oil heating) and a green labeling certification with information on MINERGIE certifications, such effect (MINERGIE versus non-MINERGIE). as whether the project was certified according to a This approach allows estimation of the relationship certain MINERGIE standard using the nearest neigh- between the treatment variables—that is, MINERGIE bor matching in ArcGIS. Detailed information on the certification, sustainable building components and data used is presented in Table 3. measures leading to certification (e.g., nonfossil heat- ing systems, MINERGIE standard roofing, fac¸ade, Admission Criteria windows, insulation, controlled room ventilation/- The empirical analysis focused on the apartments and comfort ventilation), and additional amenities and condominiums in newly constructed multifamily quality measures not needed for certification (e.g., houses. Single-family houses, terraced houses, holiday green roofing, wood windows, elevator)—as well as the outcome variables construction costs/m and net homes, or others were excluded from the analysis. Certain admission criteria were imposed on the data initial rents/m (Table 3 for the descriptive statistics to avoid data errors and extreme values or outliers: of treatment and controls). The model controls for the analysis considered only apartments that showed other factors that determine costs and rents, such as size (e.g., number of dwellings, stories, number of construction costs between CHF 100,000 and 2,000,000 per apartment, construction costs between rooms), location or centrality (e.g., accessibility by 500 and 10,000 CHF/m , and net rents between 100 public transport, population density per hectare), and and 1,000 CHF/m a. The construction costs per apart- time (year). Following the above methodology, two models (I and II) were formulated for the determin- ment showed a distinct peak at costs of CHF 500,000. A closer examination of the data revealed that 1,550 ation of construction cost and net rent premiums projects exhibited exactly CHF 500,000 as the con- (Table 4). The term net initial rents in this study struction cost per apartment. This peak indicated that refers to the asking rents of first-time listings. The Swiss residential housing market exhibited low vacan- construction costs were derived partly by the number of apartments during planning. Therefore, the con- cies over the last decade and can be seen as a lessors’ struction cost data should be regarded as reasonable market. Therefore, it is reasonable to assume that asking rents equal contractual rents. estimates. The histograms and certain other parame- ters of the response variables are shown in Figure 2 and Table 5. Data Data from building applications (construction data) Discussion of Variables and Descriptive on newly built residential real estate in Switzerland Statistics submitted between January 2010 and June 2020 were used. They were combined with the listings data on Table 3 describes the variables used in the analysis and shows the means separately for certified and non- net initial rents and label information on MINERGIE certified dwellings. Table 3 illustrates how much over- certifications. The construction data (from Docu Media Schweiz GmbH) comprised detailed informa- lap exists in the use of energy-efficient technologies tion on structural components such as supporting between certified and noncertified projects and how structures, roofs, roofing, fac¸ades, windows, and heat- balanced the sample is for possible quality measures between certified and noncertified buildings. The data ing systems. Additionally, there was information on equipment such as conveyor systems, ventilation, and can be divided into dependent and independent electricity (solar energy). Linked to these construction (structural, location, and time) variables. The depend- projects were listings from Fahrl€ander Partner AG ent variable Construction costs/m was defined by (FPRE), which contains information on the average dividing the total construction costs by the surface rents, number of rooms, and living area of projects. area of the project, which was further derived by Where possible, FPRE linked the construction cost dividing the volume (m ) of projects by 3 m, which data from Docu Media Schweiz GmbH with the FPRE corresponded to the approximate average height from listing data using geographic matching. To the best of floor to floor in residential buildings in Switzerland. the author’s knowledge, this is the first time that Additionally, the square area of a project was included extensive data on construction projects could be as a size control in the regression to capture the JOURNAL OF SUSTAINABLE REAL ESTATE 11 Table 3. Descriptive statistics of newly constructed multi-family dwellings. Construction cost sample Net initial rent sample Certified (n ¼ 1,118) Noncertified (n ¼ 10, 875) Certified (n ¼ 227) Noncertified (n ¼ 3, 335) Newly constructed multi-family houses Variable with data source in footnote Units Mean SD Mean SD Mean SD Mean SD Dependent variables Construction cost per apartment CHF 449385.3414 203644.2259 446733.6631 197801.9184 487778.0042 252200.6789 467069.9858 245669.7531 2b 2 Construction costs/m CHF/m 2135.4063 753.3928 2096.1719 719.6800 2288.3086 1236.5168 4087.7842 62327.3870 2 d 2 Net rent/m a CHF/m 287.1751 101.9666 293.6619 576.7603 281.6702 94.3080 271.4843 83.1879 Sample Owner-occupied property D 0.4741 0.4996 0.4087 0.4916 0.3436 0.4760 0.2945 0.4559 Structural variables MINERGIE Y/N D 1.0000 0.0000 0.0000 0.0000 1.0000 0.0000 0.0000 0.0000 MINERGIE standard D 0.9150 0.2790 0.0000 0.0000 0.8987 0.3024 0.0000 0.0000 MINERGIE-P or higher D 0.0850 0.2790 0.0000 0.0000 0.1013 0.3024 0.0000 0.0000 Number of apartments Apartments 16.9759 23.1528 16.0709 26.4631 19.5595 27.3714 13.5346 19.1538 b 2 Square area per project (VOLUME/3 m) [estimated] m 3431.1622 4519.9777 3320.0083 5382.2540 4102.7847 5135.6326 2862.2410 4198.5954 b 2 Square area per apartment [estimated] m 217.8972 85.5770 220.1153 84.2089 244.9220 245.3839 227.7206 131.6168 Stories Stories 3.5984 1.3609 3.5705 1.3849 3.8767 1.6000 3.6579 1.3545 d 2 Mean net floor area m 101.7150 42.9675 105.5882 211.5633 102.2845 40.4133 101.0909 33.0203 Mean number of rooms Rooms 3.7227 1.1930 3.7753 1.2198 3.7975 1.0748 3.7862 1.0515 Roofing MINERGIE standard D 0.0787 0.2694 0.0538 0.2256 0.0969 0.2965 0.0546 0.2272 Roofing finishes Green roofing D 0.2952 0.4563 0.3282 0.4696 0.4846 0.5009 0.4009 0.4902 Fac¸ade MINERGIE standard D 0.0832 0.2763 0.0573 0.2324 0.1013 0.3024 0.0558 0.2295 Wood D 0.1869 0.3900 0.1516 0.3587 0.1322 0.3394 0.1151 0.3192 Metal/steel/light metal D 0.0224 0.1479 0.0161 0.1258 0.0308 0.1733 0.0147 0.1203 Natural stone D 0.0224 0.1479 0.0142 0.1182 0.0132 0.1145 0.0114 0.1062 Glass D 0.0331 0.1790 0.0219 0.1463 0.0617 0.2411 0.0228 0.1493 Fac¸ade elements: concrete/lightweight concrete/artificial stone D 0.0179 0.1326 0.0121 0.1095 0.0132 0.1145 0.0114 0.1062 Ventilated curtain fac¸ades D 0.1011 0.3016 0.1076 0.3099 0.1454 0.3533 0.1226 0.3281 Fiber cement plates D 0.0259 0.1590 0.0299 0.1703 0.0352 0.1848 0.0372 0.1892 Ceramic D 0.0054 0.0731 0.0075 0.0865 0.0088 0.0937 0.0078 0.0880 Exposed masonry/brickwork D 0.0089 0.0942 0.0080 0.0891 0.0176 0.1319 0.0069 0.0828 Sandwich panels D 0.0036 0.0597 0.0048 0.0690 0.0044 0.0664 0.0027 0.0519 Exposed concrete D 0.0322 0.1766 0.0280 0.1648 0.0264 0.1608 0.0282 0.1655 Compact fac¸ades D 0.0143 0.1188 0.0160 0.1255 0.0264 0.1608 0.0174 0.1307 Fac¸ades without specifications D 0.0546 0.2272 0.0579 0.2336 0.0661 0.2490 0.0738 0.2614 Ref. Cat. ¼ Plastered masonry/brickwork 0.7639 0.4249 0.7635 0.4250 0.7093 0.4551 0.7412 0.4380 Windows MINERGIE standard D 0.0796 0.2708 0.0553 0.2285 0.0969 0.2965 0.0552 0.2284 Wood windows D 0.0778 0.2680 0.0543 0.2265 0.0220 0.1471 0.0372 0.1892 Metal/lightweight metal windows D 0.0564 0.2307 0.0419 0.2004 0.0132 0.1145 0.0243 0.1540 Thermal and acoustic insulated windows D 0.9991 0.0299 0.9992 0.0288 1.0000 0.0000 0.9985 0.0387 Balcony and terrace windows D 0.0286 0.1668 0.0144 0.1193 0.0220 0.1471 0.0093 0.0960 Wood/metal windows D 0.2889 0.4535 0.2954 0.4562 0.4097 0.4929 0.3346 0.4719 Windows without specifications D 0.0608 0.2391 0.0657 0.2479 0.0881 0.2841 0.0930 0.2904 Ref. Cat. ¼ Plastic windows 0.3131 0.3131 0.3260 0.4688 0.2423 0.4294 0.2747 0.4464 Electricity Solar energy D 0.0707 0.2564 0.0819 0.2743 0.0749 0.2638 0.0615 0.2402 Supporting structure Wood D 0.0903 0.2868 0.0870 0.2818 0.0793 0.2708 0.0762 0.2653 Brick D 0.6914 0.4621 0.7274 0.4453 0.7753 0.4183 0.7637 0.4249 Aerated concrete blocks D 0.0116 0.1073 0.0060 0.0771 0.0044 0.0664 0.0018 0.0424 Sand-lime brick D 0.0036 0.0597 0.0017 0.0418 0.0000 0.0000 0.0018 0.0424 Skeleton construction (concrete, steel, wood) D 0.0215 0.1450 0.0141 0.1178 0.0132 0.1145 0.0078 0.0880 Steel D 0.0188 0.1358 0.0142 0.1182 0.0176 0.1319 0.0111 0.1048 Double-shell masonry/brickwork D 0.0322 0.1766 0.0234 0.1513 0.0132 0.1145 0.0201 0.1403 Exposed masonry/brickwork D 0.0009 0.0299 0.0016 0.0395 0.0044 0.0664 0.0003 0.0173 (continued) 12 C. KEMPF Table 3. Continued. Construction cost sample Net initial rent sample Certified (n ¼ 1,118) Noncertified (n ¼ 10, 875) Certified (n ¼ 227) Noncertified (n ¼ 3, 335) Newly constructed multi-family houses Variable with data source in footnote Units Mean SD Mean SD Mean SD Mean SD Single-layer masonry/brickwork D 0.0116 0.1073 0.0121 0.1095 0.0176 0.1319 0.0171 0.1296 Supporting structure without specifications D 0.0635 0.2440 0.0711 0.2570 0.0837 0.2776 0.0822 0.2746 Ref. Cat. ¼ Concrete 0.9275 0.2593 0.9208 0.2700 0.9383 0.2411 0.9163 0.2769 Heating District heating D 0.0894 0.2855 0.0922 0.2894 0.1454 0.3533 0.0870 0.2818 Heat pumps D 0.6637 0.4727 0.6188 0.4857 0.6211 0.4862 0.5730 0.4947 Solar heating systems D 0.1556 0.3627 0.2017 0.4013 0.1542 0.3619 0.1598 0.3665 Geothermal energy/ground probes/ collectors D 0.3023 0.4595 0.2979 0.4574 0.3480 0.4774 0.2984 0.4576 Wood-fired heating D 0.0116 0.1073 0.0187 0.1354 0.0000 0.0000 0.0108 0.1034 Wood-chip heating D 0.0072 0.0843 0.0055 0.0741 0.0132 0.1145 0.0051 0.0712 Pellet heating D 0.0358 0.1858 0.0262 0.1598 0.0441 0.2057 0.0210 0.1434 Controlled room ventilation/comfort ventilation D 0.1145 0.3185 0.0839 0.2772 0.2026 0.4029 0.0939 0.2917 Gas-fired heating D 0.1118 0.3153 0.1626 0.3690 0.1189 0.3244 0.1856 0.3888 Electric heating D 0.0063 0.0789 0.0026 0.0507 0.0000 0.0000 0.0006 0.0245 Chimney/Chimney stove D 0.1073 0.3097 0.0943 0.2923 0.0969 0.2965 0.0711 0.2570 Floor heating D 0.6449 0.4788 0.6680 0.4710 0.7753 0.4183 0.7694 0.4213 Radiators/Flat panel radiators D 0.0089 0.0942 0.0073 0.0849 0.0044 0.0664 0.0108 0.1034 Heating without specifications D 0.0841 0.2776 0.0833 0.2764 0.0881 0.2841 0.1310 0.3375 Ref. Cat. ¼ Oil-fired heating 0.0125 0.1113 0.0125 0.1111 0.0088 0.0937 0.0102 0.1005 Insulation MINERGIE standard D 0.1020 0.3027 0.0618 0.2408 0.1013 0.3024 0.0567 0.2312 Internal thermal insulation D 0.0510 0.2201 0.0477 0.2132 0.0308 0.1733 0.0474 0.2125 External thermal insulation D 0.5859 0.4928 0.5665 0.4956 0.6960 0.4610 0.6441 0.4789 In-between thermal insulation D 0.0572 0.2324 0.0577 0.2333 0.0749 0.2638 0.0594 0.2364 Thermal insulation of earth-contacting components D 0.1691 0.3750 0.2018 0.4014 0.0793 0.2708 0.1121 0.3156 Insulation and seal without specifications D 0.1377 0.3448 0.1143 0.3182 0.1101 0.3137 0.1205 0.3256 Flooring Floor underlay D 1.0000 0.0000 0.9983 0.0407 1.0000 0.0000 0.9985 0.0387 Artificial stone flooring D 0.0903 0.2868 0.0794 0.2703 0.0529 0.2243 0.0660 0.2483 Parquet flooring D 0.5340 0.4991 0.5811 0.4934 0.5595 0.4975 0.5826 0.4932 Linoleum flooring/synthetic flooring D 0.0072 0.0843 0.0062 0.0783 0.0044 0.0664 0.0051 0.0712 Textile flooring D 0.0107 0.1031 0.0075 0.0865 0.0176 0.1319 0.0060 0.0772 Ceramic flooring D 0.7335 0.4424 0.7528 0.4314 0.7401 0.4396 0.7298 0.4441 Wooden flooring D 0.0170 0.1293 0.0135 0.1155 0.0000 0.0000 0.0069 0.0828 Concrete flooring D 0.6449 0.4788 0.6416 0.4796 0.6696 0.4714 0.6318 0.4824 Raised/false flooring D 0.0367 0.1880 0.0411 0.1985 0.0529 0.2243 0.0546 0.2272 Natural stone flooring D 0.0250 0.1563 0.0139 0.1170 0.0132 0.1145 0.0120 0.1089 Laminate flooring D 0.0188 0.1358 0.0177 0.1320 0.0044 0.0664 0.0177 0.1318 Industrial jointless flooring D 0.0063 0.0789 0.0053 0.0728 0.0044 0.0664 0.0090 0.0944 Equipment Air conditioner D 0.0027 0.0518 0.0027 0.0516 0.0000 0.0000 0.0024 0.0489 Conveyor system D 0.7612 0.4266 0.7679 0.4222 0.8502 0.3576 0.7988 0.4010 Sun and weather protection D 0.9991 0.0299 0.9992 0.0288 1.0000 0.0000 0.9988 0.0346 Building automation D 0.6601 0.4739 0.6817 0.4658 0.7137 0.4531 0.7037 0.4567 Safety technology D 0.6691 0.4708 0.6923 0.4616 0.7225 0.4488 0.7106 0.4535 Garage gate D 0.7469 0.4350 0.7632 0.4251 0.7797 0.4153 0.7682 0.4220 Landscaping D 0.9991 0.0299 0.9971 0.0533 1.0000 0.0000 0.9955 0.0669 Cooling systems D 0.0483 0.2145 0.0498 0.2176 0.0617 0.2411 0.0606 0.2386 Tank installations (areas with heating) D 0.0009 0.0299 0.0007 0.0271 0.0000 0.0000 0.0009 0.0300 Terraces/balconies D 0.9946 0.0731 0.9939 0.0777 0.9956 0.0664 0.9934 0.0810 Ventilation D 0.6288 0.4833 0.6617 0.4732 0.6960 0.4610 0.6798 0.4666 (continued) JOURNAL OF SUSTAINABLE REAL ESTATE 13 economies of scale in construction. The second response variable Net rent/m a indicated the net rent in CHF paid per square meter per year for the initial letting of the average apartment or condominium in a project. Parallel to the construction costs model, mean net floor area was added as a size control in the regression to capture decreasing marginal return—that is, that total rents rise with square meters more slowly than 1 for 1. Table 5 shows that the average construc- tion cost for new multifamily dwellings was approxi- mately 2,100 CHF/m . The net initial rent was approximately 272 CHF/m a. The Swiss Federal Statistical Office (FSO, 2021a) reported the average actual rent to be 196.8 CHF/m a in 2019. Therefore, the net initial rent in this sample was 38% higher than the existing average rent in Switzerland. This was expected because the FSO (2021a) average rent reflected the protected existing rents, whereas the listing data included only first-time rentals, where rents could be set according to the market. The dummy owner-occupied property was used to differentiate between rental and property (condomin- ium) markets. Forty-one percent of the projects were owner-occupied multifamily houses in the construc- tion sample. Approximately 30% of the net rent sam- ple were condominium projects. The rentals in the owner-occupied market were buy-to-let investments. Apartments in the rental housing market were typic- ally units of an apartment building owned by a single owner. The certified dwellings has a 5–7% higher share of owner-occupied properties than the noncerti- fied apartments. The primary variables of interest were MINERGIE dummies, indicating whether a project was built according to any MINERGIE standard (MINERGIE: Y/N) or whether it meets the criteria of MINERGIE (standard certification) or MINERGIE-P or higher. Approximately, 9% of the construction cost sample had a MINERGIE certification, and 6% of the net rent sample had a MINERGIE certification. The detailed certification parameter descriptions are presented in Table 6. The descriptive statistics on certification showed that MINERGIE and noncertified apartments exhib- ited a similar number of apartments, building height, floor area, and number of rooms, indicating the com- parability of the treatment and control samples. Comparing the average construction costs/m of MINERGIE (standard certification) and MINERGIE-P or higher with noncertified buildings showed a cost markup of 1.8 and 3.0%, respectively. Looking at the Table 3. Continued. Construction cost sample Net initial rent sample Certified (n ¼ 1,118) Noncertified (n ¼ 10, 875) Certified (n ¼ 227) Noncertified (n ¼ 3, 335) Newly constructed multi-family houses Variable with data source in footnote Units Mean SD Mean SD Mean SD Mean SD Habitat/pond D 0.0009 0.0299 0.0004 0.0192 0.0000 0.0000 0.0006 0.0245 Pergola D 0.1199 0.3249 0.1267 0.3327 0.1322 0.3394 0.1373 0.3442 External lighting D 0.0403 0.1966 0.0352 0.1843 0.0308 0.1733 0.0258 0.1585 Irrigation system D 0.0000 0.0000 0.0004 0.0192 0.0000 0.0000 0.0003 0.0173 Controlled parking system D 0.0036 0.0597 0.0011 0.0332 0.0000 0.0000 0.0006 0.0245 Locational variables Population density per hectare People/ha 37.8649 45.1422 42.8879 45.7290 57.0573 51.0736 56.0000 50.3577 Accessibility by public transport D Mobilit e Spatiale regions D Time fixed effects Year of building application Year 2013.7996 2.8166 2014.6384 2.9387 2013.5815 2.4542 2014.3832 2.6710 a b c d e Source: Data from ARE (2020b), Blaublatt/Bauinfo-Center Docu Media (2020), FSO (2018), FPRE (2020), MINERGIE (2021). Legend: (A) certificates (light gray), (B) technology controls that lead to certification (bold), (C) amenity controls independent from certification (gray). 14 C. KEMPF Table 4. Model description. (I) ln ðConstruction costs=m Þ¼ c þ bz þ cl þ /t þ e , 0 i i i i (II) ln ðNet rent=m and year Þ¼ c þ bz þ cl þ /t þ e , i 0 i i i i where: c ¼ Constant b, c, / ¼ Vectors of regression coefficients or implicit hedonic prices z ¼ z Vector of structural variables market, project size, and individual components of the construction project: i i – MINERGIE MINERGIE Y/N MINERGIE, “MINERGIE-P or higher” – Market Owner-occupied property market (¼dummy variable), rental market and total market (both) – Size ln(Number of apartments) ln(Square area per project) ln(Stories) ln(Mean net floor area) ln(Mean number of rooms) – Individual components of construction project (see Appendices A1 and A2) l ¼ l vector of locational variables of construction project: i i – Mobilit e Spatiale regions: 1 to 106, reference category ¼ MS 1 (City of Zurich) – Accessibility by public transport “OV-Guteklasse, € ” A, B, C, D, none (¼reference category) – Population density per hectare: Permanent population, total per hectare t ¼ t vector of time trend variable of construction project: i i – Year 2010 to 2020 (reference category ¼ 2010), year in which the construction application was approved ¼ Error term average net initial rents/m a, MINERGIE (standard multifamily dwellings were equipped with heat pumps certification) showed a 2.4% markup, and as part of the heating system. The presence of other MINERGIE-P or higher exhibited a 15.0% markup. heating systems was considerably lower. For instance, These descriptive statistics provided the first indica- oil-fired heating was used only in about 1% of the tion of cost and rental premiums in the data, although projects. Solar heating systems were used in 15–20% the analysis did not control for covariates here. of the certified and noncertified projects. In 7–8% of The structural variables (number of apartments and the projects, solar energy was used for electricity stories) were considered the control for project size in generation. the construction cost data set. The values of mean net The energy-efficient technologies that lead to certi- floor area and mean number of rooms were considered fication are printed in bold in Table 3. MINERGIE the control for the average apartment size in the ren- standard roofing, fac¸ade, windows, and insulation tal dataset. On average, approximately 14–16 apart- clearly occur more frequently in the certified con- ments with approximately 3.6 stories were constructed struction cost and net initial rent sample. Moreover, per project in the new multifamily dwellings. The controlled room ventilation/comfort ventilation is FPRE (2020) rental data reported an average net floor mentioned more often in certified construction proj- area of approximately 100 m per apartment with 3.8 ects. The nonfossil efficient technologies, such as dis- rooms. This indicates that the net floor area approxi- trict heating, heat pumps, solar heating systems, mately corresponded to the average apartment size of geothermal energy, wood-fired heating, wood-chip 99 m , as per the Swiss Federal Statistical Office (FSO, heating, and pellet heating, overlap by approximately 2021b). The construction data provided detailed infor- ±5% for the certified and noncertified samples. Gas- mation on roofing, roofing finishes, fac¸ade, windows, fired heating is built in approximately 11% of the cer- supporting structures, heating, insulation, and electri- tified and 16–19% of the noncertified projects. city. The building data were modeled as dummy vari- Certification might correlate with many unobserv- ables that assumed the value 1 or 0 based on whether able factors, not just additional unobservable invest- an attribute was present or not, respectively. Thus, the ments required for certification beyond the observable mean values corresponded to the percentage fre- investments. Investors who plan to certify a building quency of a characteristic (Table 3). For instance, might tend to design that structure to be more attract- green roofing was present in approximately 30% of ive in terms of other amenities, not just green fea- the certified and 33% of the noncertified newly con- tures. This issue of unobservables is well examined in structed multifamily houses in the construction cost relation to housing prices and school quality in the sample. Wooden fac¸ades and supporting structures work of Clapp et al. (2008) and Dhar and Ross were used in approximately every seventh to eleventh (2012). The planning application contains a detailed project. Over 60% of the newly constructed description of building measures and materials. JOURNAL OF SUSTAINABLE REAL ESTATE 15 1500 250 0 0 0 2000 4000 6000 8000 10,000 0 200 400 600 800 1000 Construction costs per square meter (n = 11,993) Net rent per square meter and year (n = 3,562) 2 2 Figure 2. Histograms of construction costs/m and net initial rent/m a. Table 5. Descriptive statistics of construction costs/m and transport quality (OV-Guteklasse), € and population net rent/m a. density per hectare. According to Schuler et al. (2005), 2 2 Construction costs/m a in CHF Net rent (CHF/m a) the 106 MS regions (Table 4) represent area-wide, eco- n 11,993 3,562 nomically homogeneous microregions. For example, Mean 2,100 272.13 the cities of Zurich, Basel, and Geneva corresponded SD 723 83.96 Median 1,957 256.17 to MS regions 1, 47, and 105, respectively. According Min 553 100.54 to the Federal Office for Spatial Development (ARE, Max 10,000 921.60 Skew 3.11 4.19 2020b), the public transport quality classes are essen- Kurtosis 18.17 1.41 tial indicators of accessibility by public transport. The Source: Data from Blaublatt/Bauinfo-Center Docu Media (2020), FPRE accessibility quality is categorized into classes A (very (2020). good accessibility), B (good accessibility), C (medium accessibility), D (low accessibility), and none (marginal Quality measures and amenities not necessarily or no public transport accessibility) (ARE, 2020a). needed for certification are shaded in gray in Table 3. The Statistics of Population and Households Approximately 5–10% of the data specifications on (STATPOP) provided another location or density cri- fac¸ades, windows, supporting structure, heating, and terion (FSO, 2018). The population density was insulation and seal are missing or unobservable (data assigned a numeric variable representing the total per- without specifications). In most cases, detailed infor- manent residential population per hectare for each mation on the building parts is available. There is a project. Table 3 shows that certified multifamily dwell- balanced distribution of quality measures between cer- ings were built in areas with an average population tified and noncertified buildings. Some visible quality density of 38 persons per hectare. The projects in the characteristics, such as wood, natural stone, or glass noncertified sample were built in areas with an aver- fac¸ade and natural stone flooring, appear more often age of 43 persons per hectare. Therefore, MINERGIE- in certified projects, reflecting the high quality of certified buildings are built in less densely populated these buildings. However, the presence of these high- areas. quality characteristics in the certified projects was Finally, the regression model controlled for time infrequent at 2–19%. For most quality characteristics, effects by modeling the year of the building applica- there was a large overlap between certified and non- tion for each project as a categorical variable using certified dwellings, which supports the comparability dummy coding. Thus, the model accounted for annual of the samples. effects such as general economic conditions, price lev- Furthermore, the regression models controlled for els of construction costs, and vacancy rates. The refer- location using Mobilite Spatiale (MS) regions, public ence year was 2010. Number of projects Number of projects 16 C. KEMPF Table 6. Descriptive statistics of MINERGIE-certified and noncertified projects. Construction cost sample Net rent sample New construction Construction Construction costs Number of Observations Net rent/m / Number of Mean net Mean number Multi-family houses Observations (n) costs/m per apartment in CHF apartments Stories (n) a in CHF apartments Stories floor area of rooms Overall 11,993 3,562 Mean 2099.83 446981 16.16 3.57 272.13 13.92 3.67 101.17 3.79 Median 1956.82 408000 8 3 256.17 8 3 97.5 3.69 Std. Dev. 722.95 198347 26.17 1.38 83.96 19.83 1.37 33.53 1.05 Certified MINERGIE or not 1,118 227 Mean 2135.41 449385 16.98 3.60 281.67 19.56 3.88 102.28 3.8 Median 1956.76 415909 9 3 261.82 9 4 97.24 3.64 Std. Dev. 753.39 203644 23.15 1.36 94.31 27.37 1.6 40.41 1.07 Certified MINERGIE 1,023 204 Mean 2133.27 447855 16.94 3.58 278.22 19.64 3.89 102.65 3.8 Median 1955.99 416667 8 3 260.43 9 4 96.98 3.63 Std. Dev. 745.36 199949 23.41 1.35 93.25 27.68 1.61 40.67 1.05 Certified MINERGIE-P or higher 95 23 Mean 2158.37 465862 17.35 3.77 312.31 18.83 3.74 99.07 3.77 Median 2000 413333 9 4 295.02 8 3 98 3.83 Std. Dev. 839.06 240477 20.3 1.43 100.22 24.99 1.51 38.81 1.28 Noncertified 10,875 3,335 Mean 2096.17 446734 16.07 3.57 271.48 13.53 3.66 101.09 3.79 Median 1957.33 406429 8 3 255.91 8 3 97.62 3.69 Std. Dev. 719.68 197802 26.46 1.38 83.19 19.15 1.35 33.02 1.05 MINERGIE MINERGIE 1,013 204 MINERGIE-ECO 10 0 Certified MINERGIE 1023 204 MINERGIE-P 67 18 MINERGIE-P-ECO 14 1 MINERGIE-A 11 4 MINERGIE-A-ECO 3 0 Certified MINERGIE-P or higher 95 23 Source: Data from ARE (2020), Blaublatt/Bauinfo-Center Docu Media (2020), FSO (2018), FPRE (2020), MINERGIE (2021). JOURNAL OF SUSTAINABLE REAL ESTATE 17 Table 3 shows the descriptive statistics of specific the robustness of the effects of other technology con- relevant attributes considered in this study. trols in specifications [V] and [VI], while increasing the coefficients of determination, R , marginally. The same held true if amenity controls were added to spec- Estimation Results and Discussion ifications [II] and [VII] and [VIII]. The regression The regression results are presented in the following specifications [III], [V], and [VII] included informa- sections. First, the distinction between MINERGIE- tion on whether a dwelling was certified according to certified properties and noncertified buildings is MINERGIE (see line a in Tables 7 and 8). The specifi- discussed. Subsequently, results for the individual cations [IV], [VI], and [VIII] considered a more dif- building measures, such as heating systems, fac¸ades, ferentiated view and distinguished between the roofing finishes, and electricity, are discussed. MINERGIE (standard certification) and MINERGIE-P The analysis commences by running a model that or higher certification (see lines b and c in Tables 7 omits the key technology controls that lead to certifica- and 8). tion and includes only the certification (see specifica- Starting with a model that omits the key technology tions [III] and [IV] in Tables 7 and 8). This allows us and amenity controls and includes only the certificates, to observe estimates for the energy-efficient invest- the market showed a positive construction cost pre- 0:0251 ments leading to certification separately from certifica- mium of e 1 ¼ 2.6% for MINERGIE versus tion (see specifications [I]–[VI] in Tables 7 and 8). noncertified buildings (see specification [III] in Table Additionally, these specifications reveal the total cost 7). The cost premiums were 2.2% and 5.9% for of or return from certification and how much of that MINERGIE (standard certification) and MINERGIE-P cost or return is explained by adding the observable or higher (see specification [IV] in Table 7). environmental investments that lead to certification. Adding the key technology controls that lead to Moreover, there are quality and amenity controls certification to this model also led to specifications that are independent from certification status. [V] and [VI]. As expected, cost premiums for certifi- However, as the descriptive statistics showed (Table cation according to MINERGIE erode down to 2.2% 3), many of the high-quality characteristics were (see specification [V] in Table 7), and those for slightly overrepresented in certified buildings. MINERGIE (standard certification) and MINERGIE-P Running regressions with and without these extra or higher decreased to 1.9 and 5.5%, respectively. controls showed that adding these variables eroded Additionally, controlling quality and amenities that the estimates on certification and the green invest- do not necessarily contribute to green status further ments made in the building (compare specifications erodes the cost premium for MINERGIE certification [III]–[VI] vs. [VII]–[VIII] in Tables 7 and 8). to 1.9% (see specification [VII]). The cost premiums Additionally, the model was rerun for environmental for MINERGIE (standard certification) and MINERGIE-P or higher decrease to 1.6 and 5.1% (see technology investments that lead to certification and amenity and quality controls separately for certified and specification [VIII]). noncertified buildings (see Appendices Table C1 and The results show that even after controlling for C2). Regressing construction costs and net initial rents technology and amenity controls, a statistically signifi- cant cost premium for MINERGIE certification per- on the environmental technology and amenity controls sists. Only a part of the certification cost is explained separately for certified and noncertified buildings led to a deeper understanding of these explanatory variables by adding the observable environmental investments that lead to certification. within the treated and nontreated groups. For instance, Additionally, the regressions were run separately it answered the following questions: Is there a higher for the certified and noncertified samples. The con- cost and return premium to environmental technologies struction cost coefficients within the noncertified within noncertified buildings? Additionally, are the cost group showed significant premiums for almost all (and return) markups for green investments smaller environmental technology investments that would lead within certified buildings? to certification, including district heating, geothermal energy, wood-chip heating, pellet heating, controlled Cost and yield effects of MINERGIE-certified room ventilation/comfort ventilation, MINERGIE apartments standard insulation, and solar energy (see specifica- Adding the MINERGIE labeling information to the tions (C) and (D) in Appendices Table C1 and C2). base regression specification [I] (Table 7) maintained In contrast, the green technology investments within 18 C. KEMPF Table 7. Regression results of construction costs/m . Specifications (I) (II) (III) (IV) (V) (VI) (VII) (VIII) A) Certificates B) Technology controls C) Amenity controls D) Market & size controls E) Location controls F) Time controls G) Constant H) Regression statistics OLS Construction costs/m Specifications (I) (II) (III) (IV) (V) (VI) (VII) (VIII) Dependent variable: ln(Construction costs/m ) Structural variables: Line: A) Certificates a Certificates MINERGIE Y/N 0.0251 0.0220 0.0187 Ref. Cat. ¼ Noncertified (0.0079) (0.0079) (0.0077) buildings b MINERGIE 0.0219 0.0189 0.0157 (0.0082) (0.0082) (0.0081) c MINERGIE-P or higher 0.0577 0.0535 0.0496 (0.0244) (0.0246) (0.0241) B) Technology d Roofing MINERGIE standard 0.0257 0.0184 0.0256 0.0254 0.0186 0.0183 controls Ref. Cat. ¼ all others (0.0314) (0.0310) (0.0313) (0.0313) (0.0309) (0.0309) e Fac¸ade MINERGIE standard 0.0315 0.0090 0.0318 0.0329 0.0095 0.0102 Ref. Cat. ¼ all others for (0.0356) (0.0365) (0.0355) (0.0355) (0.0364) (0.0364) Spec. (1), (5) & (6) Ref. Cat. ¼ Plastered masonry/brickwork for Spec. (2), (7) & (8) f Windows MINERGIE standard –0.0594 –0.0685 –0.0593 –0.0592 –0.0683 –0.0682 Ref. Cat. ¼ all others for (0.0450) (0.0438) (0.0451) (0.0451) (0.0439) (0.0438) Spec. (1), (5) & (6) Ref. Cat. ¼ Plastic windows for Spec. (2), (7) & (8) g Heating District heating 0.0277 0.0489 0.0273 0.0273 0.0484 0.0487 Ref. Cat. ¼ all others for (0.0094) (0.0135) (0.0094) (0.0094) (0.0135) (0.0135) Spec. (1), (5) & (6) Ref. Cat. ¼ Oil-fired heating for Spec. (2), (7) & (8) h Heat pumps –0.0033 0.0281 –0.0036 –0.0035 0.0278 0.0280 (0.0064) (0.0120) (0.0064) (0.0064) (0.0120) (0.0120) i Solar heating systems –0.0008 0.006 –0.0006 –0.0006 0.0061 0.0061 (0.0069) (0.0071) (0.0069) (0.0069) (0.0071) (0.0071) j Geothermal energy/ 0.0369 0.0311 0.0368 0.0367 0.0310 0.0310 ground probes/collectors (0.0059) (0.0058) (0.0059) (0.0059) (0.0058) (0.0058) k Wood-fired heating 0.0097 0.0279 0.0103 0.0104 0.0283 0.0285 (0.0174) (0.0189) (0.0174) (0.0174) (0.0189) (0.0189) l Wood chip heating 0.0313 0.0504 0.0308 0.0307 0.0498 0.0498 (0.0235) (0.0239) (0.0234) (0.0234) (0.0239) (0.0239) m Pellet heating 0.0392 0.0596 0.0390 0.0392 0.0594 0.0597 (0.0154) (0.0173) (0.0154) (0.0154) (0.0173) (0.0173) (continued) JOURNAL OF SUSTAINABLE REAL ESTATE 19 Table 7. Continued. Specifications (I) (II) (III) (IV) (V) (VI) (VII) (VIII) n Controlled room ventilation/ 0.0184 0.0180 0.0174 0.0177 0.0171 0.0175 comfort ventilation (0.0099) (0.0099) (0.0099) (0.0100) (0.0099) (0.0099) o Insulation MINERGIE standard insulation 0.0217 0.0545 0.0206 0.019 0.0529 0.0520 Ref. Cat. ¼ all, but (0.0219) (0.0281) (0.0219) (0.0220) (0.0281) (0.0282) MINERGIE standard for Spec. (1), (5) & (6) Ref. Cat. ¼ all others (2), (7) & (8) p Electricity Solar energy (electricity) 0.0300 0.0247 0.0299 0.0298 0.0246 0.0246 Ref. Cat. ¼ all others (0.0080) (0.0080) (0.0080) (0.0080) (0.0080) (0.0080) C) Amenity Controls Appendix Tables Appendix Tables Appendix Tables A2 and B1 A2 and B1 A2 and B1 D) Market & size q Market Owner-occupied property 0.0384 0.0356 0.0392 0.0392 0.0382 0.0382 0.0354 0.0355 controls (0.0049) (0.0049) (0.0049) (0.0049) (0.0049) (0.0049) (0.0049) (0.0049) r Size ln(Number of apartments) 0.2262 0.2504 0.2250 0.2250 0.2262 0.2263 0.2504 0.2505 (0.0095) (0.0098) (0.0095) (0.0095) (0.0095) (0.0095) (0.0097) (0.0097) s ln (Square area per –0.3125 –0.3506 –0.3079 –0.3079 –0.3127 –0.3127 –0.3508 –0.3509 project [m ]) (0.0093) (0.0103) (0.0093) (0.0093) (0.0093) (0.0093) (0.0103) (0.0102) t ln(Stories) 0.0390 0.0232 0.0386 0.0384 0.0389 0.0388 0.0231 0.0229 (0.0095) (0.0096) (0.0095) (0.0095) (0.0095) (0.0095) (0.0096) (0.0096) u ln(Mean net floor area) v ln(Mean number of rooms) E) Location Controls Locational variables: w Mobilit e Spatiale regions yyyy yyyy x Location Class “OV- y Appendix yy yy Appendix Appendix G€ uteklasse” Table B1 Table B1 Table B1 y Population density per y Appendix yy yy Appendix Appendix hectare Table B1 Table B1 Table B1 F) Time Control Time fixed effects: z Year of building application y Appendix yy yy Appendix Appendix Table B1 Table B1 Table B1 G) Constant Constant 9.4336 9.6325 9.4279 9.4285 9.4330 9.4334 9.6331 9.6344 (0.0567) (0.1323) (0.0565) (0.0565) (0.0567) (0.0567) (0.1324) (0.1324) H) Regression N 11,993 11,993 11,993 11,993 11,993 11,993 11,993 11,993 statistics R 0.2913 0.321 0.2869 0.287 0.2918 0.2919 0.3214 0.3215 Adjusted R 0.2831 0.3092 0.2793 0.2794 0.2835 0.2836 0.3095 0.3095 Residual Std. error 0.2422 0.2378 0.2428 0.2428 0.2421 0.2421 0.2377 0.2377 (df ¼ 11,855) (df ¼ 11,786) (df ¼ 11,867) (df ¼ 11,866) (df ¼ 11,854) (df ¼ 11,853) (df ¼ 11,785) (df ¼ 11,784) F Statistic 35.5703 27.0538 38.1877 37.9018 35.3869 35.1468 26.9608 26.8409 (df ¼ 137; 11,855) (df ¼ 206; 11,786) (df ¼ 125; 11,867) (df ¼ 126; 11,866) (df ¼ 138; 11,854) (df ¼ 139; 11,853) (df ¼ 207; 11,785) (df ¼ 208; 11,784) Source: Data from ARE (2020), Blaublatt/Bauinfo-Center Docu Media (2020), FSO (2018), FPRE (2020), MINERGIE (2021). Note: White heteroskedasticity-consistent (robust) standard errors HC1 are clustered for each location cluster within parentheses. Significance values 0.10, 0.05, and 0.01 are indicated by , , and , respectively. 20 C. KEMPF the certified group showed a significant markup only coefficient became statistically insignificant (see speci- for the expensive geothermal energy (see specifications fication [VIII] in Table 8). (A) and (B) in Appendices Table C1 and C2). The analysis of the cost-benefit ratio revealed the Regarding net initial rents, the coefficients for envir- following: First, significant cost and rent premiums for MINERGIE certifications were identified. This onmental technology that lead to certification did not differ largely within the certified and noncertified suggests that investors can expect above market samples (see specifications (E)–(H) in Appendices returns through higher net initial rents for their green Table C1 and C2). up-front construction cost markups. We analyzed whether the higher construction costs Second, cost and rent premiums for MINERGIE owing to MINERGIE certification were reflected in certifications declined when technology and amenity higher net initial rents. In general, the data show that controls were added to the regressions. However, even in addition to the structural attributes of the building, when controlling for both, statistically significant cost the main driver of rent was location. and rent markups persisted. Without technology and amenity controls, there Third, the results aligned with the literature. was a net initial rental premium of 3.6% for MINERGIE (2020) reported similar additional invest- MINERGIE-certified apartments compared to noncer- ment costs for a multifamily dwelling with tified apartments (specification [III], Table 8). The MINERGIE (standard certification) (2.8%) and standard certification yielded 3.2% higher net rents, MINERGIE-P (6.9%). Generally, similar graduations whereas MINERGIE-P or higher yielded 7.6% higher in construction costs and rents for different levels of rents (specification [IV], Table 8). certification were observed: with higher levels of certi- Adding the key technology controls that lead to fication, construction costs and net rents increased. certification only slightly decreased the coefficients for MINERGIE-certified dwellings (see specifications [V] Cost and Yield Effects of Sustainable Building and [VI] in Table 8). This shows that environmentally Measures friendly heating and energy systems, as well as con- To study the effects of heating systems on construc- struction according to MINERGIE standards, did not tion costs and net initial rents, dummy variables were impact net initial rents significantly. Thus, tenants created for the individual technologies (Appendix were not willing to pay more for these technological Table A2, lines g-m). The interaction terms of differ- attributes through higher net rents, since they do not ent heating systems (e.g., gas and geothermal) were benefit directly from the fact that heat pumps or oil not modeled. Consequently, the coefficient of each heating provides warmth. heating system corresponds to its average individual However, tenants are willing to pay higher rents effect on construction costs and rents; that is, the for certain amenities that directly benefit them. For instance, glass fac¸ades, wood/metal windows, chim- coefficients reflect a mixed effect of composite and ney/chimney stoves, double-shell masonry/brickwork, individual systems. In the regression model, oil-fired heating was the reference category. Compared to oil- and a conveyor system leads to statistically significant fired heating, solar heating systems and wood-fired net initial rent premiums (Appendix Tables A2 and B1). Including these and other amenity and quality heating showed no statistically significant cost pre- controls erode the coefficients for MINERGIE down mium, whereas district heating with a 5.1% premium, heat pumps with 2.8%, wood chips with 5.1%, pellet to 3.0% (see specification [VII] in Table 8). The heating with 6.2%, and geothermal energy with 3.1% standard certification yielded 2.6% statistically signifi- cant higher net rents, and the MINERGIE-P or higher exhibited statistically significant construction cost pre- certification yielded 6.6% higher rents, although this miums (see Table 7, specification [VIII]). In the case was not statistically significant (see specification [VIII] of geothermal energy, the higher construction costs were reflected in increased net initial rents of approxi- in Table 8). Table 8 shows that including technology controls mately 2% (see Table 8, line j). Thus, part of the does not affect the rent premiums for certification, as higher up-front costs of geothermal energy was tenants were largely unwilling to pay for nonpercepti- returned to the investor through increased net rents. ble environmental investments. However, including Excluding geothermal energy, no other statistically sig- amenity controls that directly impact tenants’ well- nificant effects of heating systems on net initial rents being and willingness to pay reduced the coefficients were identified. Overall cost premiums outweigh yield for MINERGIE. For MINERGIE-P or higher, the effects for sustainable heating system. Typically, JOURNAL OF SUSTAINABLE REAL ESTATE 21 Table 8. Regression results net rent/m a. Specifications I II III IV V VI VII VIII A) Certificates B) Technology controls C) Amenity controls D) Market & size controls E) Location controls F) Time controls G) Constant H) Regression statistics OLS Net rent/m a Specifications (I) (II) (III) (IV) (V) (VI) (VII) (VIII) Dependent variable: ln(Net rent/m a) Structural variables: Line: A) Certificates a Certificates MINERGIE Y/N 0.0358 0.0351 0.0296 Ref. Cat. ¼ Noncertified (0.0122) (0.0124) (0.0125) buildings b MINERGIE 0.0312 0.0309 0.0254 (0.0128) (0.0131) (0.0129) c MINERGIE-P or higher 0.0733 0.0696 0.0637 (0.0379) (0.0383) (0.0454) B) Technology controls d Roofing MINERGIE standard 0.1221 0.0908 0.1231 0.119 0.0907 0.0873 Ref. Cat. ¼ all others (0.2082) (0.1963) (0.2074) (0.2079) (0.1962) (0.1966) e Fac¸ade MINERGIE standard –0.0785 –0.0883 –0.0801 –0.0823 –0.0896 –0.0916 Ref. Cat. ¼ all others for (0.0753) (0.0673) (0.0747) (0.0745) (0.0670) (0.0670) Spec. (1), (5) & (6) Ref. Cat. ¼ Plastered masonry/brickwork for Spec. (2), (7) & (8) f Windows MINERGIE standard –0.0649 –0.048 –0.0623 –0.0564 –0.0457 –0.0398 Ref. Cat. ¼ all others for (0.0887) (0.0815) (0.0877) (0.0884) (0.0811) (0.0821) Spec. (1), (5) & (6) Ref. Cat. ¼ Plastic windows for Spec. (2), (7) & (8) g Heating District heating –0.0139 0.0038 –0.0156 –0.0157 0.0021 0.0017 Ref. Cat. ¼ all others for (0.0132) (0.0213) (0.0132) (0.0132) (0.0214) (0.0214) Spec. (1), (5) & (6) Ref. Cat. ¼ Oil-fired heating for Spec. (2), (7) & (8) h Heat pumps –0.0022 0.0193 –0.0031 –0.003 0.0182 0.0179 (0.0089) (0.0191) (0.0089) (0.0089) (0.0191) (0.0191) i Solar heating systems 0.0047 –0.0028 0.0049 0.0048 –0.0024 –0.0026 (0.0107) (0.0110) (0.0107) (0.0107) (0.0110) (0.0110) j Geothermal energy/ 0.0256 0.0192 0.0255 0.0255 0.0191 0.0191 ground probes/ collectors (0.0089) (0.0088) (0.0089) (0.0089) (0.0088) (0.0088) k Wood-fired heating –0.0216 –0.0119 –0.0195 –0.0197 –0.0102 –0.0106 (0.0311) (0.0316) (0.0311) (0.0311) (0.0316) (0.0316) l Wood-chip heating –0.0221 0.0123 –0.0262 –0.0254 0.0084 0.0091 (0.0345) (0.0353) (0.0332) (0.0333) (0.0341) (0.0343) m Pellet heating –0.013 0.0075 –0.016 –0.0153 0.0046 0.0049 (continued) 22 C. KEMPF Table 8. Continued. Specifications I II III IV V VI VII VIII (0.0198) (0.0242) (0.0195) (0.0196) (0.0241) (0.0241) n Controlled room ventilation/ 0.0128 0.005 0.0107 0.0108 0.0032 0.0033 comfort ventilation (0.0135) (0.0133) (0.0136) (0.0136) (0.0134) (0.0134) o Insulation MINERGIE standard insulation 0.0189 0.034 0.0164 0.0164 0.0329 0.0319 Ref. Cat. ¼ all, but (0.0729) (0.0826) (0.0723) (0.0722) (0.0817) (0.0817) MINERGIE standard for Spec. (1), (5) & (6) Ref. Cat. ¼ all others (2), (7) & (8) p Electricity Solar energy (electricity) –0.0074 –0.0008 –0.0078 –0.0076 –0.0011 –0.0009 Ref. Cat. ¼ all others (0.0149) (0.0148) (0.0150) (0.0150) (0.0148) (0.0148) C) Amenity controls Appendix Tables Appendix Tables Appendix Tables A2 and B1 A2 and B1 A2 and B1 D) Market & size controls q Market Owner-occupied property 0.0096 –0.0011 0.0098 0.0097 0.0092 0.0091 –0.0014 –0.0015 (0.0074) (0.0077) (0.0074) (0.0074) (0.0074) (0.0074) (0.0077) (0.0077) r Size ln(Number of apartments) –0.0195 –0.0306 –0.0207 –0.0207 –0.0201 –0.0201 –0.0311 –0.0311 (0.0047) (0.0051) (0.0045) (0.0045) (0.0047) (0.0047) (0.0051) (0.0051) s ln(Square area per project [m2]) t ln(Stories) 0.015 0.008 0.012 0.0119 0.0148 0.0147 0.0078 0.0077 (0.0136) (0.0139) (0.0134) (0.0134) (0.0136) (0.0136) (0.0139) (0.0139) u ln(Mean net floor area) –0.3293 –0.3484 –0.3244 –0.3242 –0.3293 –0.3291 –0.3483 –0.3481 (0.0228) (0.0228) (0.0229) (0.0229) (0.0228) (0.0228) (0.0228) (0.0228) v ln(Mean number of rooms) 0.0388 0.0498 0.0373 0.0374 0.0382 0.0382 0.0491 0.0491 (0.0260) (0.0258) (0.0263) (0.0263) (0.0259) (0.0259) (0.0257) (0.0257) E) Location controls Locational variables: w Mobilit e Spatiale regions yyyyyyy y x Location Class “OV- y Appendix yyyy Appendix Appendix G€ uteklasse” Table B1 Table B1 Table B1 y Population density per y Appendix yyyy Appendix Appendix hectare Table B1 Table B1 Table B1 F) Time control Time fixed effects: z Year of building application y Appendix yyyy Appendix Appendix Table B1 Table B1 Table B1 G) Constant Constant 7.3174 7.2658 7.3123 7.3115 7.3166 7.3156 7.2690 7.2689 (0.0886) (0.1325) (0.0885) (0.0886) (0.0886) (0.0887) (0.1323) (0.1324) H) Regression statistics N 3,562 3,562 3,562 3,562 3,562 3,562 3,562 3,562 R 0.5812 0.608 0.5796 0.5798 0.582 0.5821 0.6086 0.6087 Adjusted R 0.5649 0.5844 0.5649 0.5649 0.5656 0.5656 0.5849 0.5849 Residual Std. Error 0.1899 0.1856 0.1899 0.1899 0.1898 0.1898 0.1855 0.1855 (df ¼ 3428) (df ¼ 3359) (df ¼ 3440) (df ¼ 3439) (df ¼ 3427) (df ¼ 3426) (df ¼ 3358) (df ¼ 3357) F Statistic 35.7644 25.7933 39.2029 38.8892 35.6046 35.3450 25.7188 25.5953 (df ¼ 133; 3428) (df ¼ 202; 3359) (df ¼ 121; 3440) (df ¼ 122; 3439) (df ¼ 134; 3427) (df ¼ 135; 3426) (df ¼ 203; 3358) (df ¼ 204; 3357) Source: Data from ARE (2020), Blaublatt/Bauinfo-Center Docu Media (2020), FSO (2018), FPRE. (2020), MINERGIE (2021). Note: White heteroskedasticity-consistent (robust) standard errors HC1 are clustered for each location cluster within parentheses. Significance values 0.10, 0.05, and 0.01 are indicated by , , and , respectively. JOURNAL OF SUSTAINABLE REAL ESTATE 23 listings do not disclose the type of heating systems. As conventionally constructed buildings. Furthermore, prospective tenants lack information on a possible the study analyzed how costs and rents are attributed sustainable solution, the type of heating system does to the following drivers: MINERGIE certificates, tech- not influence their willingness to pay. However, this nology controls (that lead to certification), and amen- might change with surging oil, gas, and energy prices. ity controls (independent from certification). Hence, Plastered masonry/brickwork was identified in the results advance our understanding of the cost of approximately two-thirds of the fac¸ades of newly con- and return from certification, including the underlying structed multifamily dwellings and serves as the refer- components of green buildings. ence category in the analysis. The market showed a The analysis showed that after controlling for tech- nology and amenities, a statistically significant cost construction cost premium of approximately 1.5% for wooden fac¸ades; however, it does not reward these premium for MINERGIE certification of approxi- increased investment costs with higher net initial rents mately 1.9% persists (1.6% for MINERGIE (standard (Appendix Table A2, line e). In contrast, the market certification) and 5.1% for MINERGIE-P or higher). In addition, sustainable technology that led to certifi- does reward expensive ceramic and glass fac¸ades with increased net initial rents (see Appendix Table A2, cation also demanded a statistically significant cost line e); that is, the market rewards perceptible quality premium. The empirical results showed statistically on the outside of the building with higher net initial significant cost premiums for the sustainable construc- tion measures: 5.0% for district heating and 3.1% for rents. Ventilated curtain fac¸ades and exposed concrete geothermal energy, with the reference category oil- show cost markups of 2.7 and 4.6%, respectively, which are not reflected in higher net initial rents in fired heating, and 3.2% for green roofing over other the market. roofing finishes (see specification [VIII] in Appendix In Switzerland, approximately every third multi- Table A2). In general, higher costs were incurred for specific sustainable construction measures and family dwelling constructed between January 2010 and June 2020 possesses green roofing. Green roofing MINERGIE certifications. However, with a few excep- exhibited construction cost premiums of 3.2% com- tions, no statistically significant effects on net initial rents were identified for the individual green building pared to other roofing finishes in the analysis. measures. For MINERGIE, the results were different. Investors received higher net initial rents of 7.0% for MINERGIE (standard certification) and MINERGIE-P these increased up-front costs (see Appendix Table A2, line d). The data suggest that the aesthetic and or higher yielded higher net initial rents of 2.6 and 6.6% (not significant) for apartments. However, the climatic advantages of green roofing provided a per- analysis showed that environmentally friendly technol- ceptible benefit to the tenant. Therefore, the analysis ogy (technology controls) did not significantly impact shows that additional costs for green roofing pay off. Solar energy showed construction cost premiums of net initial rents. In contrast, high-quality materials 2.5% in the market (see line p in Tables 7 and 8). In and amenities that deliver a perceptible benefit to ten- ants exhibited statistically significant rental premiums. contrast, there were no statistically significant effects These results suggest that green building practices on rents. Despite this unfavorable cost-benefit ratio, without labels or certifications are not rewarded by the popularity of solar energy is increasing strongly, the market through increased rents. The implementa- and the data show that solar energy is on the rise in tions require credible labels, such as MINERGIE certi- Switzerland. fication, to yield a green rent premium. This aligns To conclude, specific sustainable construction with the work of Bond and Devine (2015), who found measures cost more than conventional building meas- that certification was more convincing than just stat- ures. However, except for geothermal energy and green roofing, no statistically significant effects on net ing that a property was green. A secondary inference that reinforces the findings initial rents were found for the individual green build- in the literature is that the construction costs and net ing measures. Other details concerning building meas- initial rents increase with the level of certification ure effects are discussed by Kraft and Kempf (2021). (Dressler et al., 2017; Glossner et al., 2015). This analysis focused on construction costs and Conclusion their initial returns, rather than taking a holistic life This study investigated whether sustainable residential cycle costs and returns approach, and it showed that multifamily dwellings exhibit (I) higher construction there might be a discrepancy between costs and costs and (II) increased net initial rents compared to returns with respect to single construction measures 24 C. KEMPF in the short run. Furthermore, for solar energy, the Notes data showed a high market penetration, despite an 1. MINERGIE is a Swiss green building standard. For adverse cost-benefit ratio. For other measures, the detailed information on the standard, see https://www. results suggested that MINERGIE certification could minergie.com/. 2. The MuKEn14. (2020) is a body of energy regulations counteract this disincentive in Switzerland. in the building sector. The Konferenz Kantonaler Nonetheless, this myopic incentive problem might Energiedirektoren (EnDK) recommends that cantons impede a fast change toward a highly sustainable con- adopt MuKEn to the extent possible when enacting struction industry; therefore, a full cost and return energy regulations. According to MuKEn14, a new analysis in the future would certainly be worthwhile. building requires approximately 3.5 L of heating oil The focus of this empirical analysis was short equivalents of thermal energy, whereas comprehensively renovated properties require approximately 8 L of term because of the limited availability of long-term heating oil equivalents. data (i.e., whole building life cycle data). MINERGIE 3. The hedonic method for house price estimation was entered the market in 1998, and heat pumps became introduced by Rosen (1974) and is still the standard popular around the same time in Switzerland (FWS, method for estimating real estate prices. The idea 2022). Assuming a typical life cycle of 60 years for behind this valuation method is that the price, rent, or construction costs of a property are determined by the buildings in Switzerland, large-scale empirical data sum of its structure- (z ), location- (l ), and time-related i i will be available for future research (King & (t ) characteristics. Implicit prices b, c, / are attributed Trub € estein, 2018). Nonetheless, hypothetical net pre- to the individual value-, rent-, or cost-determining sent value calculations at the case study level could attributes such as living space, centrality, or be informative for a holistic cost-benefit consider- construction year, and the summation results in the ation of sustainable vs. conventional buildings in property price, rent, or costs. Switzerland. During work on this paper, resource and energy Disclosure statement prices experienced extreme peaks, highlighting the No potential conflict of interest was reported by the need to build more sustainably, with less resource author(s). dependence in the long run. The price shock related to oil, gas, and electricity has altered the cost-benefit ratio of fossil fuel heating solutions and sustainable ORCID systems. Fossil fuel heating systems suddenly experi- Constantin Kempf http://orcid.org/0000-0002-0104-1141 enced increased operating costs due to high gas and oil prices. More expensively constructed green heat- References ing systems, such as heat pumps and geothermal energy, also encountered higher electricity prices. Ade, R. (2018). The cost of Homestar: A case study on how Given the challenging economic situation with sup- to achieve a 6–10 Homestar rating for stand-alone and terraced housing in Hobsonville Point. BRANZ. ply chain problems and volatile prices, evaluating Ade, R., & Rehm, M. (2020). Reaching for the stars: Green the costs and benefits of different heating and con- construction cost premiums for Homestar certification. struction systems becomes more complex. However, Construction Management and Economics, 38, 570–580. the resource savings associated with more efficient, https://doi.org/10.1080/01446193.2019.1640370 sustainable systems might more than compensate for ARE. (2020a). 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Retrieved January 2, 2023, from https://www.zh.ch/de/ Building Research & Information, 41, 198–208. https:// planen-bauen/bauvorschriften/bauvorschriften-gebaeude- doi.org/10.1080/09613218.2013.769145 energie.html JOURNAL OF SUSTAINABLE REAL ESTATE 27 Appendix Table A1. Individual components of construction project. B) Technology controls that lead to certification C) Amenity controls independent from certification Reference category (amenity controls in gray), if amenity controls are not included. See specifications [I], [V], and [VI] Reference category (italic), if amenity controls are included for regression specifications [II], [VII], and [VIII] Roofing: Supporting structure: Flooring: MINERGIE standard Wood Floor underlay Reference category ¼ all others Brick Artificial stone flooring Aerated concrete blocks Parquet flooring Roofing finishes: Sand-lime brick Linoleum flooring/synthetic flooring Green roofing Skeleton construction (concrete, steel, wood) Textile flooring Ref. Cat. ¼ all others Steel Ceramic flooring Double-shell masonry/brickwork Wooden flooring Fac¸ade: Exposed masonry/brickwork Concrete flooring MINERGIE standard Single-layer masonry/brickwork Raised/false flooring Wood Supporting structure without specifications Natural stone flooring Metal/steel/light metal Ref. Cat. ¼ Concrete Laminate flooring Natural stone Industrial jointless flooring Glass Heating: Ref. Cat. ¼ all others Fac¸ade elements: concrete/lightweight concrete/artificial stone District heating Ventilated curtain fac¸ades Heat pumps Interior: Fiber cement plates Solar heating systems Not differentiated Ceramic Geothermal energy/ground probes/collectors Exposed masonry/brickwork Wood-fired heating Equipment: Sandwich panels Wood-chip heating Air conditioner Exposed concrete Pellet heating Conveyor system Compact fac¸ades Controlled room ventilation/comfort ventilation Sun and weather protection Fac¸ades without specifications Gas-fired heating Building automation Ref. Cat. ¼ Plastered masonry/brickwork Electric heating Safety technology Chimney/Chimney stove Garage gate Windows: Floor heating Landscaping MINERGIE standard Radiators/Flat panel radiators Cooling systems Wood windows Heating without specifications Tank installations (areas with heating) Metal/lightweight metal windows Ref. Cat. ¼ Oil-fired heating Terraces/balconies Thermal and acoustic insulated windows Ventilation Balcony and terrace windows Insulation: Habitat/pond Wood/metal windows MINERGIE standard Pergola Windows without specifications Internal thermal insulation External lighting Ref. Cat. ¼ Plastic windows External thermal insulation Irrigation system In-between thermal insulation Controlled parking system Electricity: Thermal insulation of earth-contacting components Ref. Cat. ¼ all others Solar energy Insulation and seal without specifications Ref. Cat. ¼ all others Ref. Cat. ¼ all others 28 C. KEMPF 2 2 Table A2. Full-blown regression results of construction costs/m and net rent/m a including amenity controls (specifications [II], [VII], and [VIII]) = . Specifications (II) (VII) (VIII) (II) (VII) (VIII) A) Certificates B) Technology controls C) Amenity controls D) Market & size controls E) Location controls F) Time controls G) Constant H) Regression statistics 2 2 OLS Construction costs/m Net rent/m a Specifications (II) (VII) (VIII) (II) (VII) (VIII) Dependent variable: Structural variables: Line: A) Certificates a Certificates MINERGIE Y/N 0.0187 0.0296 Ref. Cat. ¼ Noncertified buildings (0.0077) (0.0125) b MINERGIE 0.0157 0.0254 (0.0081) (0.0129) c MINERGIE-P or higher 0.0496 0.0637 (0.0241) (0.0454) B) Technology & d Roofing MINERGIE standard 0.0184 0.0186 0.0183 0.0908 0.0907 0.0873 C) Amenity controls Ref. Cat. ¼ all others (0.0310) (0.0309) (0.0309) (0.1963) (0.1962) (0.1966) Roofing finishes Green roofing 0.0316 0.0313 0.0313 0.0681 0.0678 0.0678 Ref. Cat. ¼ all others (0.0058) (0.0058) (0.0058) (0.0081) (0.0081) (0.0081) e Fac¸ade MINERGIE standard 0.0090 0.0095 0.0102 – 0.0883 – 0.0896 – 0.0916 Ref. Cat. ¼ Plastered masonry/ (0.0365) (0.0364) (0.0364) (0.0673) (0.0670) (0.0670) brickwork for Spec. (2), (7) & (8) Wood 0.0146 0.0147 0.0146 –0.0193 –0.0197 –0.0197 (0.0084) (0.0084) (0.0084) (0.0136) (0.0136) (0.0136) Metal/steel/light metal 0.0036 0.0031 0.0028 –0.0423 –0.0435 –0.0431 (0.0181) (0.0181) (0.0181) (0.0295) (0.0294) (0.0294) Natural stone 0.0371 0.0370 0.0369 0.0503 0.0498 0.0505 (0.0233) (0.0233) (0.0233) (0.0348) (0.0347) (0.0347) Glass 0.0664 0.0661 0.0661 0.0612 0.0586 0.0585 (0.0172) (0.0172) (0.0172) (0.0250) (0.0251) (0.0252) Fac¸ade elements: concrete/lightweight 0.0264 0.0258 0.0262 0.0108 0.0108 0.0112 concrete/artificial stone (0.0219) (0.0219) (0.0219) (0.0421) (0.0420) (0.0421) Ventilated curtain fac¸ades 0.0263 0.0263 0.0263 0.0163 0.0162 0.0158 (0.0092) (0.0092) (0.0092) (0.0142) (0.0141) (0.0142) Fiber cement plates –0.0062 –0.0062 –0.0063 –0.0403 –0.0400 –0.0394 (0.0147) (0.0147) (0.0147) (0.0216) (0.0216) (0.0216) Ceramic 0.0348 0.0353 0.0354 0.0654 0.0657 0.0663 (0.0299) (0.0298) (0.0298) (0.0347) (0.0345) (0.0345) Exposed masonry/brickwork 0.0226 0.0224 0.0226 0.0036 0.0023 0.0026 (0.0231) (0.0231) (0.0231) (0.0428) (0.0430) (0.0430) Sandwich panels –0.0122 –0.0121 –0.0125 –0.0218 –0.0228 –0.0264 (0.0423) (0.0422) (0.0422) (0.0743) (0.0746) (0.0752) Exposed concrete 0.0450 0.0450 0.0452 0.0084 0.0083 0.0086 (0.0144) (0.0144) (0.0144) (0.0243) (0.0244) (0.0244) Compact fac¸ades 0.0157 0.0153 0.0156 –0.0181 –0.0191 –0.0193 (0.0165) (0.0165) (0.0165) (0.0243) (0.0242) (0.0242) Fac¸ades without specifications 0.0000 –0.0003 –0.0005 –0.0262 –0.0268 –0.0262 (0.0195) (0.0195) (0.0195) (0.0251) (0.0251) (0.0252) (continued) JOURNAL OF SUSTAINABLE REAL ESTATE 29 Table A2. Continued. Specifications (II) (VII) (VIII) (II) (VII) (VIII) f Windows MINERGIE standard – 0.0685 – 0.0683 – 0.0682 – 0.048 – 0.0457 – 0.0398 Ref. Cat. ¼ Plastic windows (0.0438) (0.0439) (0.0438) (0.0815) (0.0811) (0.0821) for Spec. (2), (7) & (8) Wood windows 0.0536 0.0534 0.0533 0.0034 0.0041 0.0043 (0.0115) (0.0115) (0.0115) (0.0191) (0.0191) (0.0191) Metal/lightweight metal windows 0.0400 0.0404 0.0406 0.0023 0.0037 0.0042 (0.0126) (0.0127) (0.0127) (0.0264) (0.0264) (0.0264) Thermal and acoustic insulated windows 0.0708 0.0727 0.0724 0.0848 0.0845 0.0835 (0.0878) (0.0873) (0.0874) (0.0598) (0.0594) (0.0594) Balcony and terrace windows 0.0112 0.0104 0.0107 –0.0196 –0.0223 –0.0215 (0.0197) (0.0196) (0.0196) (0.0387) (0.0389) (0.0388) Wood/metal windows 0.0459 0.0457 0.0457 0.0139 0.0135 0.0135 (0.0058) (0.0058) (0.0058) (0.008) (0.008) (0.008) Windows without specifications 0.005 0.0051 0.005 0.0182 0.0184 0.0181 (0.0170) (0.0170) (0.0170) (0.0211) (0.0211) (0.0211) g Heating District heating 0.0489 0.0484 0.0487 0.0038 0.0021 0.0017 Ref. Cat. ¼ Oil-fired heating (0.0135) (0.0135) (0.0135) (0.0213) (0.0214) (0.0214) h for Spec. (2), (7) & (8) Heat pumps 0.0281 0.0278 0.0280 0.0193 0.0182 0.0179 (0.0120) (0.0120) (0.0120) (0.0191) (0.0191) (0.0191) i Solar heating systems 0.006 0.0061 0.0061 –0.0028 –0.0024 –0.0026 (0.0071) (0.0071) (0.0071) (0.0110) (0.0110) (0.0110) j Geothermal energy/ground probes/collectors 0.0311 0.0310 0.0310 0.0192 0.0191 0.0191 (0.0058) (0.0058) (0.0058) (0.0088) (0.0088) (0.0088) k Wood-fired heating 0.0279 0.0283 0.0285 –0.0119 –0.0102 –0.0106 (0.0189) (0.0189) (0.0189) (0.0316) (0.0316) (0.0316) l Wood-chip heating 0.0504 0.0498 0.0498 0.0123 0.0084 0.0091 (0.0239) (0.0239) (0.0239) (0.0353) (0.0341) (0.0343) m Pellet heating 0.0596 0.0594 0.0597 0.0075 0.0046 0.0049 (0.0173) (0.0173) (0.0173) (0.0242) (0.0241) (0.0241) n Controlled room ventilation/comfort ventilation 0.0180 0.0171 0.0175 0.005 0.0032 0.0033 (0.0099) (0.0099) (0.0099) (0.0133) (0.0134) (0.0134) Gas-fired heating 0.0206 0.0207 0.0209 0.0258 0.0252 0.0249 (0.0125) (0.0125) (0.0125) (0.0192) (0.0192) (0.0192) Electric heating 0.0186 0.0175 0.0181 0.0087 0.0086 0.009 (0.0293) (0.0293) (0.0293) (0.1243) (0.1245) (0.1243) Chimney/Chimney stove 0.0430 0.0432 0.0432 0.0330 0.0324 0.0323 (0.0081) (0.0080) (0.0080) (0.0132) (0.0132) (0.0132) Floor heating –0.0043 –0.0048 –0.0048 0.0122 0.0124 0.0123 (0.0084) (0.0085) (0.0085) (0.0135) (0.0135) (0.0135) Radiators/Flat panel radiators 0.0241 0.0238 0.0237 0.0106 0.0114 0.0116 (0.0275) (0.0274) (0.0274) (0.0245) (0.0245) (0.0246) Heating without specifications 0.0545 0.0539 0.0540 0.0193 0.0189 0.0186 (0.0152) (0.0152) (0.0152) (0.0217) (0.0217) (0.0218) o Insulation MINERGIE standard insulation 0.0545 0.0529 0.0520 0.034 0.0329 0.0319 Ref. Cat. ¼ all others (0.0281) (0.0281) (0.0282) (0.0826) (0.0817) (0.0817) Internal thermal insulation –0.0243 –0.0244 –0.0244 –0.0005 –0.0001 0.00004 (0.0111) (0.0111) (0.0111) (0.0162) (0.0162) (0.0162) External thermal insulation –0.0152 –0.0158 –0.0158 –0.0245 –0.0253 –0.0251 (0.0094) (0.0094) (0.0094) (0.0144) (0.0144) (0.0144) In-between thermal insulation 0.0260 0.0251 0.0249 –0.0285 –0.0293 –0.0294 (0.0129) (0.0129) (0.0129) (0.0214) (0.0214) (0.0214) (continued) 30 C. KEMPF Table A2. Continued. Specifications (II) (VII) (VIII) (II) (VII) (VIII) Thermal insulation of earth-contacting components 0.0065 0.006 0.006 –0.0296 –0.029 –0.0293 (0.0115) (0.0115) (0.0115) (0.0205) (0.0205) (0.0205) Insulation and seal without specifications 0.0201 0.0196 0.0198 –0.0169 –0.0166 –0.0168 (0.0123) (0.0123) (0.0123) (0.0196) (0.0196) (0.0196) p Electricity Solar energy 0.0247 0.0246 0.0246 –0.0008 –0.0011 –0.0009 Ref. Cat. ¼ all others (0.0080) (0.0080) (0.0080) (0.0148) (0.0148) (0.0148) Supporting Structure Wood –0.0138 –0.0139 –0.0142 0.0157 0.0156 0.0157 Ref. Cat. ¼ Concrete (0.0107) (0.0107) (0.0107) (0.0167) (0.0167) (0.0166) Brick –0.0019 –0.002 –0.0021 0.0127 0.0125 0.0125 (0.0071) (0.0072) (0.0072) (0.0122) (0.0122) (0.0122) Aerated concrete blocks –0.1297 –0.1287 –0.1296 –0.055 –0.0549 –0.0537 (0.0379) (0.0379) (0.0379) (0.0686) (0.0687) (0.0685) Sand-lime brick 0.0397 0.0379 0.0385 0.0381 0.04 0.0399 (0.0473) (0.0471) (0.0471) (0.0560) (0.0562) (0.0561) Skeleton construction (concrete, steel, wood) –0.0081 –0.0071 –0.0074 –0.0081 –0.0095 –0.0085 (0.0294) (0.0294) (0.0294) (0.0497) (0.0497) (0.0497) Steel –0.0329 –0.0329 –0.033 0.0134 0.0137 0.0145 (0.0206) (0.0206) (0.0206) (0.0211) (0.0210) (0.0211) Double-shell masonry/brickwork 0.0224 0.0223 0.0219 0.0629 0.0632 0.0633 (0.0189) (0.0189) (0.0189) (0.0281) (0.0281) (0.0281) Exposed masonry/brickwork 0.0244 0.0248 0.0251 0.0125 0.0012 0.0037 (0.0421) (0.0424) (0.0424) (0.0684) (0.0795) (0.0782) Single-layer masonry/brickwork –0.0087 –0.0094 –0.0094 –0.0281 –0.0291 –0.0288 (0.0213) (0.0213) (0.0214) (0.0294) (0.0293) (0.0293) Supporting structure without specifications 0.0088 0.0088 0.0088 0.0549 0.0539 0.0537 (0.0152) (0.0152) (0.0152) (0.0244) (0.0243) (0.0243) Source: Data from ARE (2020), Blaublatt/Bauinfo-Center Docu Media (2020), FSO (2018), FPRE (2020), MINERGIE (2021). Note: White heteroskedasticity-consistent (robust) standard errors HC1 are clustered for each location cluster within parentheses. Significance values 0.10, 0.05, and 0.01 are indicated by , , and , respectively. JOURNAL OF SUSTAINABLE REAL ESTATE 31 2 2 Table B1. Full-blown regression results of construction costs/m and net rent/m a including amenity controls (specifications [II], [VII], and [VIII]) 2/2. Specifications (II) (VII) (VIII) (II) (VII) (VIII) A) Certificates B) Technology controls C) Amenity controls D) Market & size controls E) Location controls F) Time controls G) Constant H) Regression statistics 2 2 OLS Construction costs/m Net rent/m a Specifications (II) (VII) (VIII) (II) (VII) (VIII) Dependent variable: Structural variables: Line: B) Technology & C) Flooring Floor underlay –0.0305 –0.0336 –0.0335 –0.0106 –0.0121 –0.0118 Amenity controls Ref. Cat. ¼ all others (0.0737) (0.0737) (0.0737) (0.0598) (0.0594) (0.0593) Artificial stone flooring –0.0431 –0.0430 –0.0427 –0.0212 –0.0214 –0.0214 (0.0109) (0.0109) (0.0109) (0.0172) (0.0171) (0.0171) Parquet flooring –0.0123 –0.0124 –0.0124 –0.0214 –0.0214 –0.0213 (0.0059) (0.0059) (0.0059) (0.0088) (0.0088) (0.0088) Linoleum flooring/synthetic 0.0355 0.0353 0.0348 0.0217 0.0224 0.0204 flooring (0.0255) (0.0255) (0.0254) (0.0434) (0.0429) (0.0426) Textile flooring –0.0404 –0.0402 –0.0399 –0.0053 –0.0077 –0.0072 (0.0244) (0.0244) (0.0244) (0.0429) (0.0427) (0.0427) Ceramic flooring –0.0024 –0.0019 –0.0019 –0.0092 –0.0089 –0.0089 (0.0070) (0.0071) (0.0071) (0.0111) (0.0111) (0.0111) Wooden flooring –0.0013 –0.0011 –0.0017 –0.0395 –0.0372 –0.0373 (0.0218) (0.0218) (0.0218) (0.0450) (0.0447) (0.0448) Concrete flooring –0.0251 –0.0253 –0.0253 0.0060 0.0062 0.0064 (0.0104) (0.0104) (0.0104) (0.0146) (0.0147) (0.0147) Raised/false flooring 0.0315 0.0317 0.0317 0.0215 0.0216 0.0219 (0.0125) (0.0124) (0.0124) (0.0161) (0.0161) (0.0161) Natural stone flooring 0.0834 0.0832 0.0834 0.001 0.0017 0.0017 (0.0199) (0.0199) (0.0199) (0.0305) (0.0306) (0.0306) Laminate flooring –0.0265 –0.0261 –0.0262 –0.0337 –0.0323 –0.0324 (0.0170) (0.0169) (0.0169) (0.0262) (0.0263) (0.0263) Industrial jointless flooring 0.0107 0.0107 0.0111 –0.0163 –0.0147 –0.0145 (0.0337) (0.0337) (0.0336) (0.0433) (0.0432) (0.0433) Interior Not differentiated Equipment Air conditioner 0.0553 0.0562 0.0576 –0.0137 –0.0104 –0.0106 (0.0384) (0.0386) (0.0385) (0.0386) (0.0387) (0.0387) Conveyor system 0.0202 0.0200 0.0200 0.0374 0.0370 0.0371 (0.0070) (0.0070) (0.0070) (0.0103) (0.0103) (0.0103) Sun and weather protection –0.0313 –0.0302 –0.031 0.0567 0.0559 0.0554 (0.1047) (0.1052) (0.1051) (0.0958) (0.0955) (0.0958) Building automation 0.0433 0.0433 0.0430 0.0145 0.0149 0.0143 (0.0214) (0.0213) (0.0214) (0.0349) (0.0345) (0.0346) Safety technology –0.0193 –0.0192 –0.019 –0.0473 –0.0472 –0.0467 (0.0192) (0.0192) (0.0192) (0.0330) (0.0326) (0.0327) Garage gate 0.0049 0.0051 0.0053 0.0477 0.0478 0.0481 (continued) 32 C. KEMPF Table B1. Continued. Specifications (II) (VII) (VIII) (II) (VII) (VIII) (0.0074) (0.0074) (0.0074) (0.0108) (0.0108) (0.0108) Landscaping –0.0745 –0.0749 –0.0752 –0.0448 –0.0456 –0.0464 (0.0504) (0.0503) (0.0503) (0.0500) (0.0501) (0.0502) Cooling systems 0.0516 0.0517 0.0517 0.0001 0.0002 0.0001 (0.0108) (0.0108) (0.0108) (0.0154) (0.0154) (0.0154) Tank installations (areas –0.0179 –0.017 –0.0163 0.1442 0.1454 0.145 with heating) (0.1423) (0.1422) (0.1422) (0.0893) (0.0906) (0.0907) Terraces/balconies 0.0254 0.026 0.0263 –0.0187 –0.0185 –0.0167 (0.0335) (0.0336) (0.0336) (0.0466) (0.0462) (0.0458) Ventilation 0.0211 0.0213 0.0213 –0.0200 –0.0201 –0.0200 (0.0144) (0.0144) (0.0144) (0.0207) (0.0207) (0.0207) Habitat/pond 0.0445 0.0447 0.0452 –0.1847 –0.1849 –0.1849 (0.0731) (0.0731) (0.0733) (0.0392) (0.0391) (0.0391) Pergola 0.0212 0.0211 0.0211 –0.0035 –0.0039 –0.0039 (0.0087) (0.0087) (0.0087) (0.0121) (0.0121) (0.0121) External lighting 0.017 0.017 0.0168 0.0227 0.0227 0.0225 (0.0127) (0.0127) (0.0127) (0.0224) (0.0224) (0.0224) Irrigation system 0.0226 0.0254 0.026 0.1960 0.1954 0.1950 (0.0935) (0.0938) (0.0939) (0.0614) (0.0613) (0.0612) Controlled parking system 0.0543 0.0517 0.0491 –0.0647 –0.0617 –0.0617 (0.0553) (0.0556) (0.0550) (0.0365) (0.0364) (0.0364) D) Market & size controls q Market Owner-occupied property 0.0356 0.0354 0.0355 –0.0011 –0.0014 –0.0015 (0.0049) (0.0049) (0.0049) (0.0077) (0.0077) (0.0077) r Size ln(Number of apartments) 0.2504 0.2504 0.2505 –0.0306 –0.0311 –0.0311 (0.0098) (0.0097) (0.0097) (0.0051) (0.0051) (0.0051) s ln(Square area per project [m ]) –0.3506 –0.3508 –0.3509 (0.0103) (0.0103) (0.0102) t ln(Stories) 0.0232 0.0231 0.0229 0.008 0.0078 0.0077 (0.0096) (0.0096) (0.0096) (0.0139) (0.0139) (0.0139) u ln(Mean net floor area) –0.3484 –0.3483 –0.3481 (0.0228) (0.0228) (0.0228) v ln(Mean number of rooms) 0.0498 0.0491 0.0491 (0.0258) (0.0257) (0.0257) E) Location Locational variables: w Mobilit e Spatiale regions y y y y y y x Accessibility by public transport A 0.0249 0.0254 0.0258 0.0846 0.0846 0.0848 Ref. Cat. ¼ none (0.0115) (0.0115) (0.0115) (0.0163) (0.0164) (0.0164) B 0.0161 0.0168 0.0169 0.0613 0.0611 0.0611 (0.0088) (0.0088) (0.0088) (0.0133) (0.0133) (0.0133) C 0.0011 0.0018 0.0019 0.0422 0.0421 0.0422 (0.0072) (0.0072) (0.0072) (0.0118) (0.0118) (0.0118) D 0.0032 0.0038 0.0037 0.0188 0.0185 0.0184 (0.0061) (0.0061) (0.0061) (0.0116) (0.0116) (0.0116) y Population density per hectare –0.0060 –0.0059 –0.0059 –0.0133 –0.0131 –0.0131 (0.0023) (0.0023) (0.0023) (0.0035) (0.0035) (0.0035) F) Time Time fixed effects: z Year of building application 2011 0.0415 0.0418 0.0418 0.0166 0.0159 0.0161 Ref. Cat. ¼ 2010 (0.0103) (0.0103) (0.0103) (0.0145) (0.0145) (0.0145) 2012 0.0841 0.0843 0.0843 0.0222 0.0216 0.0219 (0.0104) (0.0104) (0.0104) (0.0146) (0.0146) (0.0146) (continued) JOURNAL OF SUSTAINABLE REAL ESTATE 33 Table B1. Continued. Specifications (II) (VII) (VIII) (II) (VII) (VIII) 2013 0.0882 0.0889 0.0889 0.015 0.0157 0.0159 (0.0101) (0.0101) (0.0101) (0.0138) (0.0138) (0.0138) 2014 0.0901 0.0906 0.0906 0.0093 0.0098 0.01 (0.0104) (0.0104) (0.0104) (0.0139) (0.0139) (0.0139) 2015 0.0967 0.0972 0.0974 0.0128 0.0129 0.0131 (0.0104) (0.0104) (0.0104) (0.0139) (0.0139) (0.0139) 2016 0.1113 0.1121 0.1122 0.0013 0.002 0.0021 (0.0107) (0.0107) (0.0107) (0.0136) (0.0136) (0.0136) 2017 0.1057 0.1066 0.1066 0.0081 0.0087 0.0084 (0.0106) (0.0107) (0.0107) (0.0152) (0.0152) (0.0152) 2018 0.0986 0.0999 0.0999 –0.0196 –0.0183 –0.0183 (0.0106) (0.0106) (0.0106) (0.0172) (0.0172) (0.0172) 2019 0.1320 0.1335 0.1334 –0.0758 –0.0744 –0.0743 (0.0118) (0.0118) (0.0118) (0.0203) (0.0203) (0.0203) 2020 0.1255 0.1269 0.1267 –0.2356 –0.2339 –0.2349 (0.0135) (0.0135) (0.0135) (0.0326) (0.0326) (0.0326) G) Constant Constant 9.6325 9.6331 9.6344 7.2658 7.2690 7.2689 (0.1323) (0.1324) (0.1324) (0.1325) (0.1323) (0.1324) H) Regression statistics N 11,993 11,993 11,993 3,562 3,562 3,562 R 0.321 0.3214 0.3215 0.608 0.6086 0.6087 Adjusted R 0.3092 0.3095 0.3095 0.5844 0.5849 0.5849 Residual Std. Error 0.2378 0.2377 0.2377 0.1856 0.1855 0.1855 (df ¼ 11786) (df ¼ 11785) (df ¼ 11784) (df ¼ 3359) (df ¼ 3358) (df ¼ 3357) F Statistic 27.0538 26.9608 26.8409 25.7933 25.7188 25.5953 (df ¼ 206; 11786) (df ¼ 207; 11785) (df ¼ 208; 11784) (df ¼ 202; 3359) (df ¼ 203; 3358) (df ¼ 204; 3357) Source: Data from ARE (2020), Blaublatt/Bauinfo-Center Docu Media (2020), FSO (2018), FPRE (2020), MINERGIE (2021). Note: White heteroskedasticity-consistent (robust) standard errors HC1 are clustered for each location cluster within parentheses. Significance values 0.10, 0.05, and 0.01 are indicated by , , and , respectively. 34 C. KEMPF Table C1. Regression results for separated samples of certified and noncertified building projects = . Specifications (A) (B) (C) (D) (E) (F) (G) (H) A) Certificates B) Technology controls C) Amenity controls D) Market & size controls E) Location controls F) Time controls G) Constant H) Regression statistics Sample Certified sample Noncertified sample Certified sample Noncertified sample 2 2 OLS Construction costs/m Net rent/m a Specifications (A) (B) (C) (D) (E) (F) (G) (H) 2 2 Dependent variable: ln(Construction costs/m ) ln(Net rent/m a) Structural variables: Line: A) Certificates a Certificates MINERGIE Y/N Ref. Cat. ¼ noncertified buildings b MINERGIE c MINERGIE-P or higher B) Technology & d Roofing MINERGIE standard –0.046 –0.0152 0.0302 0.0185 –0.0837 0.1215 0.1342 0.0883 C) Amenity controls Ref. Cat. ¼ all others (0.1130) (0.1106) (0.0313) (0.0305) (0.0867) (0.1914) (0.2721) (0.2601) Roofing finishes Green roofing 0.0269 0.0314 –0.0031 0.0711 Ref. Cat. ¼ all others (0.0226) (0.0061) (0.0429) (0.0085) e Fac¸ade MINERGIE standard 0.1014 0.1301 0.0247 –0.0021 0.2284 0.3615 –0.0977 –0.1027 Ref. Cat. ¼ Plastered masonry/ (0.1569) (0.1942) (0.0348) (0.0352) (0.1736) (0.3339) (0.0801) (0.0718) brickwork for Spec. (2), (7) & (8) Wood 0.0712 0.0056 0.1948 –0.0242 (0.0305) (0.0089) (0.1021) (0.0140) Metal/steel/light metal 0.0303 –0.002 –0.0596 –0.0469 (0.0609) (0.0192) (0.1290) (0.0323) Natural stone 0.0392 0.0322 0.1810 0.0457 (0.0638) (0.0250) (0.1118) (0.0377) Glass 0.0875 0.0623 0.0386 0.0662 (0.0527) (0.0186) (0.0725) (0.0278) Fac¸ade elements: concrete/lightweight 0.0297 0.0237 0.1323 0.0097 concrete/artificial stone (0.0625) (0.0240) (0.1615) (0.0457) Ventilated curtain fac¸ades 0.0114 0.0295 –0.1381 0.0152 (0.0355) (0.0096) (0.0984) (0.0146) Fiber cement plates 0.0747 –0.0148 0.0989 –0.0373 (0.0633) (0.0152) (0.1247) (0.0214) Ceramic 0.0373 0.0333 0.0596 0.055 (0.0589) (0.0320) (0.1824) (0.0367) Exposed masonry/brickwork –0.0429 0.0272 –0.1138 0.0109 (0.0583) (0.0255) (0.1214) (0.0486) Sandwich panels 0.1557 –0.0259 0.3161 –0.021 (0.0807) (0.0444) (0.4007) (0.0851) Exposed concrete –0.0128 0.0532 0.0636 0.0115 (0.0478) (0.0153) (0.1453) (0.0258) Compact fac¸ades 0.046 0.0134 –0.0237 –0.0258 (0.0545) (0.0176) (0.0956) (0.0259) Fac¸ades without specifications 0.0219 –0.0019 –0.1708 –0.0256 (0.0601) (0.0203) (0.1246) (0.0256) (continued) JOURNAL OF SUSTAINABLE REAL ESTATE 35 Table C1. Continued. Specifications (A) (B) (C) (D) (E) (F) (G) (H) f Windows Minergie standard –0.0100 0.0221 –0.0614 –0.0688 –0.0501 –0.2176 –0.076 –0.0596 Ref. Cat. ¼ Plastic windows (0.2321) (0.2086) (0.0400) (0.0385) (0.0932) (0.1493) (0.1217) (0.1134) for Spec. (2), (7) & (8) Wood windows 0.0808 0.0475 –0.2252 0.0053 (0.0363) (0.0123) (0.1224) (0.0198) Metal/lightweight metal windows –0.0455 0.0457 0.2956 0.0023 (0.0458) (0.0133) (0.1895) (0.0277) Thermal and acoustic insulated windows –0.3645 0.1065 0.0737 (0.1055) (0.0920) (0.0589) Balcony and terrace windows 0.1240 –0.0151 0.0935 –0.0167 (0.0684) (0.0195) (0.1388) (0.0438) Wood/metal windows 0.0455 0.0443 –0.0282 0.0147 (0.0235) (0.0061) (0.0417) (0.0085) Windows without specifications –0.0794 0.0074 0.1698 0.0187 (0.0472) (0.0179) (0.1083) (0.0220) g Heating District heating 0.0089 0.0397 0.0288 0.0528 0.0129 0.0396 –0.0156 –0.0004 Ref. Cat. ¼ Oil-fired heating (0.0297) (0.0418) (0.0099) (0.0145) (0.0512) (0.0949) (0.0141) (0.0228) h for Spec. (2), (7) & (8) Heat pumps –0.0009 0.0423 –0.0043 0.0293 –0.0077 0.0414 –0.0034 0.0176 (0.0221) (0.0378) (0.0068) (0.0128) (0.0469) (0.0677) (0.0091) (0.0206) i Solar heating systems –0.0234 –0.0209 0.0001 0.008 –0.0461 –0.1051 0.0060 –0.0022 (0.0250) (0.0261) (0.0073) (0.0075) (0.0600) (0.0830) (0.0109) (0.0112) j Geothermal energy/ground probes/collectors 0.0545 0.0429 0.0349 0.0293 0.0665 0.0769 0.0257 0.0186 (0.0208) (0.0214) (0.0062) (0.0061) (0.0394) (0.0519) (0.0093) (0.0092) k Wood-fired heating 0.0905 0.1302 0.0043 0.0256 –0.0164 –0.0094 (0.0815) (0.0764) (0.0178) (0.0197) (0.0314) (0.0327) l Wood-chip heating 0.0218 0.0578 0.0246 0.0448 0.1050 0.2019 –0.0575 –0.0254 (0.0736) (0.0743) (0.0252) (0.0256) (0.0940) (0.1893) (0.0328) (0.0320) m Pellet heating 0.0642 0.0522 0.0352 0.0599 0.1017 0.167 –0.0254 –0.0049 (0.0512) (0.0559) (0.0163) (0.0184) (0.0675) (0.1033) (0.0207) (0.0257) n Controlled room ventilation/comfort ventilation –0.0481 –0.0226 0.0209 0.0183 0.0138 0.0231 0.0134 0.0053 (0.0306) (0.0332) (0.0108) (0.0107) (0.0482) (0.0779) (0.0148) (0.0147) Gas-fired heating 0.0552 0.02 0.0688 0.0255 (0.0416) (0.0133) (0.0776) (0.0206) Electric heating 0.0443 0.0097 0.0215 (0.0756) (0.0335) (0.1190) Chimney/Chimney stove 0.0614 0.0404 0.0379 0.0339 (0.0326) (0.0084) (0.0814) (0.0140) Floor heating –0.0125 –0.0053 0.0435 0.0153 (0.0290) (0.0089) (0.0842) (0.0142) Radiators/Flat panel radiators 0.0492 0.0187 –0.3573 0.0154 (0.0783) (0.0298) (0.2881) (0.0255) Heating without specifications 0.034 0.0585 0.0928 0.0202 (0.0512) (0.0162) (0.0842) (0.0231) o Insulation Minergie standard insulation –0.0489 –0.1443 0.0307 0.0713 –0.0912 –0.2721 0.0352 0.0598 Ref. Cat. ¼ all others (0.0763) (0.1324) (0.0224) (0.0275) (0.0980) (0.1875) (0.0973) (0.1058) Internal thermal insulation 0.0259 –0.0311 –0.04 –0.0013 (0.0461) (0.0114) (0.0908) (0.0169) External thermal insulation –0.0498 –0.0148 0.0276 –0.0231 (0.0335) (0.0098) (0.0867) (0.0152) In-between thermal insulation 0.0215 0.0252 0.0894 –0.0292 (0.0441) (0.0137) (0.0993) (0.0228) (continued) 36 C. KEMPF Table C1. Continued. Specifications (A) (B) (C) (D) (E) (F) (G) (H) Thermal insulation of earth-contacting components –0.0157 0.0066 –0.1029 –0.0408 (0.0357) (0.0123) (0.1367) (0.0215) Insulation and seal without specifications –0.0429 0.0267 0.0148 –0.0186 (0.0395) (0.0131) (0.1084) (0.0204) p Electricity Solar energy –0.0037 –0.0276 0.0326 0.0286 –0.0436 –0.0127 –0.0033 0.0043 Ref. Cat. ¼ all others (0.0274) (0.0292) (0.0084) (0.0084) (0.0408) (0.0578) (0.0159) (0.0159) Supporting Structure Wood 0.0013 –0.013 –0.1707 0.0175 Ref. Cat. ¼ Concrete (0.0377) (0.0113) (0.1144) (0.0175) Brick –0.0085 –0.0015 0.1141 0.0112 (0.0220) (0.0077) (0.0828) (0.0128) Aerated concrete blocks –0.1197 –0.1438 0.0908 –0.0473 (0.1153) (0.0405) (0.5186) (0.0700) Sand-lime brick 0.04150 0.0265 0.03810 (0.1110) (0.0489) (0.0575) Skeleton construction (concrete, steel, wood) 0.0134 0.0026 –0.2265 –0.0015 (0.1162) (0.0309) (0.1500) (0.0546) Steel –0.0629 –0.0290 0.1321 0.0107 (0.0464) (0.0229) (0.1422) (0.0232) Double-shell masonry/brickwork 0.1070 0.0180 0.0065 0.0579 (0.0768) (0.0195) (0.1440) (0.0290) Exposed masonry/brickwork –0.1870 0.0353 –0.1164 0.0971 (0.0778) (0.0443) (0.1807) (0.0621) Single-layer masonry/brickwork –0.0420 –0.0076 0.2825 –0.0386 (0.0702) (0.0223) (0.2050) (0.0304) Supporting structure without specifications 0.0731 0.0035 0.1430 0.0465 (0.0472) (0.0161) (0.0716) (0.0243) Source: Data from ARE (2020), Blaublatt/Bauinfo-Center Docu Media (2020), FSO (2018), FPRE (2020), MINERGIE (2021). Note: White heteroskedasticity-consistent (robust) standard errors HC1 are clustered for each location cluster within parentheses. Significance values 0.10, 0.05, and 0.01 are indicated by , , and , respectively. JOURNAL OF SUSTAINABLE REAL ESTATE 37 Table C2. Regression results for separated samples of certified and noncertified building projects 2/2. Specifications (A) (B) (C) (D) (E) (F) (G) (H) A) Certificates B) Technology controls C) Amenity controls D) Market & size controls E) Location controls F) Time controls G) Constant H) Regression statistics Sample Certified sample Noncertified sample Certified sample Noncertified sample 2 2 OLS Construction costs/m Net rent/m a Specifications (A) (B) (C) (D) (E) (F) (G) (H) 2 2 Dependent variable: ln(Construction costs/m ) ln(Net rent/m a) Structural variables: Line: B) Technology & Flooring Floor underlay –0.0268 –0.0077 C) Amenity controls Ref. Cat. ¼ all others (0.0740) (0.0591) Artificial stone flooring –0.0639 –0.0460 –0.0801 –0.0236 (0.0423) (0.0113) (0.1259) (0.0180) Parquet flooring –0.0057 –0.0136 –0.008 –0.0220 (0.0248) (0.0061) (0.0461) (0.0092) Linoleum flooring/synthetic flooring 0.0344 0.0363 0.7714 0.0125 (0.0770) (0.0271) (0.2176) (0.0434) Textile flooring –0.0902 –0.036 –0.1763 –0.0125 (0.0874) (0.0257) (0.1814) (0.0484) Ceramic flooring –0.0386 0.001 0.0362 –0.0101 (0.0268) (0.0074) (0.0547) (0.0117) Wooden flooring 0.0111 0.0017 –0.0342 (0.0681) (0.0232) (0.0446) Concrete flooring 0.0174 –0.0285 0.1824 –0.0017 (0.0348) (0.0110) (0.0832) (0.0155) Raised/false flooring 0.0788 0.0279 –0.1002 0.0227 (0.0448) (0.0132) (0.1185) (0.0169) Natural stone flooring 0.0638 0.0863 0.0385 0.0049 (0.0549) (0.0220) (0.1972) (0.0323) Laminate flooring 0.0560 –0.0291 0.2595 –0.0351 (0.0665) (0.0174) (0.3180) (0.0268) Industrial jointless flooring –0.0437 0.0095 0.0475 –0.0222 (0.1394) (0.0343) (0.2522) (0.0447) Interior Not differentiated Equipment Air conditioner 0.0175 0.0569 0.0084 (0.0982) (0.0426) (0.0414) Conveyor system 0.0514 0.0171 0.0607 0.0384 (0.0271) (0.0074) (0.0573) (0.0108) Sun and weather protection 0.4713 –0.0746 0.0482 (0.1009) (0.1125) (0.0967) Building automation 0.1341 0.0323 –0.7000 0.0183 (0.0988) (0.0220) (0.2511) (0.0355) Safety technology –0.073 –0.0166 0.7092 –0.0551 (0.0882) (0.0199) (0.2651) (0.0331) (continued) 38 C. KEMPF Table C2. Continued. Specifications (A) (B) (C) (D) (E) (F) (G) (H) Garage gate –0.0388 0.0094 –0.0282 0.0474 (0.0270) (0.0078) (0.0804) (0.0113) Landscaping –0.2892 –0.0588 –0.0524 (0.1355) (0.0514) (0.0511) Cooling systems 0.0375 0.0533 –0.1084 0.0013 (0.0425) (0.0114) (0.1127) (0.0161) Tank installations (areas with heating) –0.1831 –0.0123 0.1408 (0.1304) (0.1589) (0.0913) Terraces/balconies 0.1922 0.0118 –0.0053 (0.0858) (0.0353) (0.0463) Ventilation –0.0468 0.0312 –0.1438 –0.0115 (0.0535) (0.0151) (0.1605) (0.0217) Habitat/pond 0.0958 –0.0022 –0.1888 (0.1264) (0.0805) (0.0406) Pergola 0.0208 0.0218 0.0305 –0.0038 (0.0293) (0.0093) (0.0744) (0.0129) External lighting 0.0262 0.0166 0.1743 0.0235 (0.0442) (0.0132) (0.1549) (0.0241) Irrigation system 0.0214 0.2108 (0.1013) (0.0702) Controlled parking system –0.0100 0.0799 –0.0846 (0.1470) (0.0568) (0.0388) D) market & q Market Owner-occupied property 0.0530 0.0469 0.0372 0.0344 –0.0251 –0.0692 0.01 –0.0007 size controls (0.0169) (0.0182) (0.0051) (0.0051) (0.0306) (0.0613) (0.0077) (0.0080) r Size ln(Number of apartments) 0.2083 0.2286 0.2280 0.2513 –0.0462 –0.0971 –0.0183 –0.0290 (0.0328) (0.0349) (0.0099) (0.0102) (0.0191) (0.0342) (0.0048) (0.0053) s ln(Square area per project [m ]) –0.2961 –0.3247 –0.3150 –0.3529 (0.0322) (0.0367) (0.0098) (0.0107) t ln(Stories) 0.0717 0.0254 0.0365 0.0225 0.0770 0.2595 0.0105 0.0024 (0.0335) (0.0332) (0.0099) (0.0100) (0.0548) (0.0706) (0.0142) (0.0146) u ln(Mean net floor area) –0.4593 –0.5948 –0.3264 –0.3441 (0.1104) (0.1372) (0.0234) (0.0235) v ln(Mean number of rooms) 0.1843 0.3473 0.0352 0.0447 (0.1473) (0.1833) (0.0265) (0.0265) E) Location Locational variables: w Mobilit e Spatiale regions y y y y y y y y x Accessibility by public transport A 0.0864 0.0994 0.0502 0.0231 0.1760 0.2400 0.1037 0.0801 Ref. Cat. ¼ none (0.0385) (0.0408) (0.0122) (0.0122) (0.0807) (0.1006) (0.0169) (0.0171) B 0.0563 0.0515 0.0300 0.013 0.1347 0.1934 0.0740 0.0555 (0.0333) (0.0328) (0.0092) (0.0092) (0.0746) (0.1130) (0.0137) (0.0138) C –0.0053 0.0057 0.011 0.0027 0.0991 0.125 0.0511 0.0384 (0.0248) (0.0254) (0.0077) (0.0076) (0.0604) (0.0812) (0.0124) (0.0124) D 0.0008 0.0108 0.0079 0.005 0.0567 0.0761 0.0199 0.0144 (0.0202) (0.0207) (0.0066) (0.0064) (0.0690) (0.0900) (0.0122) (0.0120) y Population density per hectare –0.0105 –0.0125 –0.0075 –0.0062 –0.0228 –0.0400 –0.0135 –0.0126 (0.0075) (0.0079) (0.0025) (0.0025) (0.0155) (0.0239) (0.0038) (0.0037) F) Time Time fixed effects: z Year of building application 2011 0.0505 0.0648 0.0352 0.0382 0.0658 0.0619 0.0111 0.0155 Ref. Cat. ¼ 2010 (0.0317) (0.0339) (0.0112) (0.0110) (0.0572) (0.0666) (0.0153) (0.0153) 2012 0.1055 0.0934 0.0753 0.0806 0.0613 0.0577 0.0203 0.023 (continued) JOURNAL OF SUSTAINABLE REAL ESTATE 39 Table C2. Continued. Specifications (A) (B) (C) (D) (E) (F) (G) (H) (0.0318) (0.0322) (0.0114) (0.0111) (0.0537) (0.0795) (0.0153) (0.0153) 2013 0.1085 0.1315 0.0774 0.0813 0.0112 0.0134 0.0100 0.0190 (0.0377) (0.0388) (0.0108) (0.0106) (0.0563) (0.0714) (0.0142) (0.0144) 2014 0.1168 0.1311 0.0796 0.0857 0.0081 0.06 0.0064 0.012 (0.0322) (0.0340) (0.0112) (0.0111) (0.0566) (0.0889) (0.0143) (0.0147) 2015 0.1025 0.1293 0.0836 0.0934 0.1004 0.1145 0.0026 0.0137 (0.0348) (0.0365) (0.0110) (0.0110) (0.0466) (0.0806) (0.0143) (0.0148) 2016 0.0874 0.1169 0.1014 0.1108 0.0464 0.0996 –0.0072 0.004 (0.0323) (0.0337) (0.0115) (0.0113) (0.0607) (0.1244) (0.0142) (0.0144) 2017 0.1292 0.1472 0.0903 0.1003 –0.0198 0.0241 0.0036 0.0112 (0.0362) (0.0368) (0.0112) (0.0112) (0.0615) (0.0961) (0.0154) (0.0161) 2018 0.1577 0.1880 0.0838 0.0942 0.0671 0.0059 –0.0294 –0.0176 (0.0381) (0.0414) (0.0112) (0.0111) (0.0566) (0.1076) (0.0179) (0.0179) 2019 0.1448 0.1775 0.1217 0.1302 0.1302 0.0748 –0.0882 –0.0734 (0.0403) (0.0449) (0.0124) (0.0123) (0.1101) (0.1561) (0.0212) (0.0210) 2020 0.1179 0.1400 0.1188 0.1214 –0.4106 –0.7603 –0.2282 –0.2260 (0.0471) (0.0533) (0.0141) (0.0141) (0.1078) (0.3355) (0.0341) (0.0334) G) Constant Constant 7.1462 7.3295 7.2577 7.4553 7.7519 7.7003 7.3016 7.2574 (0.1962) (0.2891) (0.0596) (0.1352) (0.3807) (0.5401) (0.0925) (0.1351) H) Regression statistics N 1,118 1,118 10,875 10,875 227 227 3,335 3,335 R 0.3764 0.446 0.291 0.3206 0.8672 0.9266 0.5729 0.6011 Adjusted R 0.2936 0.3267 0.282 0.3074 0.7655 0.7727 0.5554 0.5756 Residual Std. Error 0.2460 0.2402 0.2418 0.2375 0.1465 0.1443 0.1913 0.1869 (df ¼ 986) (df ¼ 919) (df ¼ 10737) (df ¼ 10668) (df ¼ 128) (df ¼ 73) (df ¼ 3203) (df ¼ 3134) F Statistic 4.5436 3.7368 32.1718 24.4337 8.5264 6.0209 32.7943 23.6107 (df ¼ 131; 986) (df ¼ 198; 919) (df ¼ 137; 10737) (df ¼ 206; 10668) (df ¼ 98; 128) (df ¼ 153; 73) (df ¼ 131; 3203) (df ¼ 200; 3134) Source: Data from ARE (2020), Blaublatt/Bauinfo-Center Docu Media (2020), FSO (2018), FPRE (2020), MINERGIE (2021). Note: White heteroskedasticity-consistent (robust) standard errors HC1 are clustered for each location cluster within parentheses. Significance values 0.10, 0.05, and 0.01 are indicated by , , and , respectively.

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Journal of Sustainable Real Estate Taylor & Francis

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Publisher: Taylor & Francis
ISSN: 1949-8284
DOI: 10.1080/19498276.2023.2180835
Publisher site: See Article on Publisher Site

Abstract

Journal

Journal of Sustainable Real Estate – Taylor & Francis

Published: Dec 31, 2023

Keywords: Green buildings; green rent and cost premiums; hedonic regression; MINERGIE

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Construction Costs and Initial Yield Effects of MINERGIE Certification and Sustainable Construction Measures in New Multifamily Houses in Switzerland

Construction Costs and Initial Yield Effects of MINERGIE Certification and Sustainable Construction Measures in New Multifamily Houses in Switzerland

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Construction Costs and Initial Yield Effects of MINERGIE Certification and Sustainable Construction Measures in New Multifamily Houses in Switzerland

Construction Costs and Initial Yield Effects of MINERGIE Certification and Sustainable Construction Measures in New Multifamily Houses in Switzerland

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