Real Estate

‘Substantial economic returns’ in Singapore

October 11, 2011 | 2 min read

Research into the City of Singapore’s fast-growing housing industry provides evidence that investing in green housing can offer substantial economic returns. In the paper ‘Economic Returns to Energy-Efficient Investments in the Housing Market: Evidence from Singapore’, three international scholars have examined the results of the Green Mark (GM) program, launched by Singapore’s Building and Construction Authority (BCA) in 2005. The GM program aims to stimulate energy efficient building with a lower environmental impact. The authors’ research included analysis of almost 37,000 transactions related to 697 individual GM-rated Singapore building projects, comparing them to equal-but-non-GM projects. Results indicate GM properties can offer a price premium of up to 15% over equivalent non-GM projects.

While the authors of the study – Yongheng Deng and Zhiliang Li, both from the National University of Singapore, and John M. Quigley of the University of California at Berkeley – admit that with a housing market as vigorous as that of Singapore “we cannot claim to have controlled completely for all differences in quality between GM and NGM dwellings” in their research.

But their two-stage estimation, based on empirical analysis of 697 individual projects and 36,512 transactions in the Singapore housing market “suggests substantial economic returns to green building.” Even when adjusted for the broadest number of hedonic characteristics – locations of the city, proximity to public transport and shopping districts, etc. –Green Mark properties still show a significant 4% price premium.

The construction and operation of buildings accounts for about one third of all greenhouse gas emissions, and 40% of the worldwide consumption of energy and raw materials. Particularly in Asia, say the authors of‘Economic Returns to Energy-Efficient Investments in the Housing Market,’projected trends in urbanization indicate that energy efficiency in buildings is becoming more and more important.

Thus a program like Green Mark, which stimulates green development through incentive schemes and rates building projects on a variety of environmental factors, can indeed have a positive effect on property value. Green Mark ratings, which vary from standard Certification to Platinum level, take the energy and water efficiency, environmental protection, indoor environmental quality and other ‘green’ features of a building into account. Green Mark rated buildings must be re-assessed every three years.

The research of Deng, Li and Quigley is one of the first analyses of the economics of green buildings in the residential sector, and the only one analyzing property markets in Asia. “Our results provide insight about the operation of the housing market in one country,” they say, “but the policy implications about the economic returns to sustainable investments in the property market may have broader applications for emerging markets in Asia.”


This article may be reproduced according to our terms of use with attribution (and link, if online) to To be cited as: “‘Substantial Economic Returns’ on Singapore’s Green Housing”, Yongheng Deng, Zhiliang Li, John M. Quigley,, October 12, 2011.

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Research Paper


Yongheng Deng
Professor of Finance and Real Estate, National University of Singapore

John M. Quigley †
I.Donald TernerDistinguished Professor, U.C. Berkeley

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