Environmental Certifications in the Office Segment : Does the Swedish Market Reward Certified Properties with a Higher Price?

Abstract: This thesis aims to explore if and why there exists a price premium for environmentally certified office properties on the Swedish market. The purpose is to contribute with knowledge within the research field of certified properties and how they are valued by the market. In order to answer the research question, regressions of office transaction data have been performed, of which the main model examined whether environmentally certified office properties generate a price premium compared to non-certified properties. Two additional models were analysed, investigating if certain certifications affect the price premium more than others. The transaction data was provided by the real estate consultancy firm Cushman & Wakefield. Furthermore, in contrast to previous research, a cost variable was included in each model. However, in order to capture the significance of the parameter, regressions excluding the cost variable were as well performed. The result of the analysis suggests that environmentally certified office properties are sold at a 14-26% higher price compared to equal properties which are not certified. In addition, certified properties with BREEAM and LEED appear to be sold at a 28-30% respectively 30-31% higher price than GreenBuilding certified properties. The cost variable did not seem to have any larger impact of the price. Most likely, a large part of the generated price premium is a result of aiming for branding benefits which are received by obtaining environmentally certified properties.