Green and Gold Buildings? Detecting Real Estate Market Premium for Green Buildings through Evolutionary Polynomial Regression

Abstract

This study concerns the determination of empirical evidence of a real estate market premium for Green Buildings and of an aware role of the private real estate market as driver to foster-up urban and architectural sustainability and energy efficiency. In real estate markets, there is growing relevance of Green Buildings, especially in cities where the greater part of residential buildings is built before the first regulations on energy performance. Through policies oriented towards sustainable practices, a twofold goal can be achieved: energy consumption mitigation respecting the historical value for existing buildings, direct economic impacts on real estate values. In some metropolitan or urban contexts, the “green premium” for buildings can be understood as a real “gold premium”. This result has been highlighted and quantified with a real estate market analysis developed for a central area of an Italian mid-size city, pursued through the innovative tool of Evolutionary Polynomial Regression (EPR). The study highlighted a higher sale price for properties characterized by the best ecological characteristics and energy efficiency (+41.52%).

Keywords

• green buildings
• green premium
• real estate market
• hedonic price model
• evolutionary polynomial regression