# RECORD e06a4d3e776b1e6666c940f56997612ef11873e4
# TITLE: The effect of BEAM Plus certification on property price in Hong Kong
# YEAR: 2017.0  VENUE: nan  DOI: 10.3846/1648715x.2017.1409290
# AUTHORS: E. Hui; C. Tse; Ka Yu
# PAGES: 17  CANDIDATE TABLE PAGES (1-based): [9, 13]
# ABSTRACT: In response to the public’s increasing awareness of sustainable development, the construction industry has introduced “green” buildings which emphasize better environmental performance. However, as a building’s environmental performance is difficult to discern for laymen, different green building certifications have been established for evaluations in this regard. This study evaluates whether there exists a price premium for living space in buildings certified with BEAM Plus. The findings show that the prices of flats in BEAM Plus-certified buildings are 4.4% higher than those in nonregistered buildings, and that housing units in buildings with an “unclassified” rating are transacted at a discount of 5.9%. Nevertheless, if homebuyers mistake an “unclassified” building for a non-registered building, due to the non-disclosure of the “unclassified” result by developers, the price premium of BEAM Plus certification becomes higher (6.2%). Regardless, the price premium is much lower than those on the office sector. The reasons behind such differences can be attributed to the disparities in the tangible and intangible benefits associated with green living space and green office space. Policy implications with reference to Hong Kong’s GFA concession policy are then discussed.


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Copyright © 2017 Vilnius Gediminas Technical University (VGTU) Press
http://www.tandfonline.com/TSPM
INTERNATIONAL JOURNAL OF STRATEGIC PROPERTY MANAGEMENT
ISSN 1648-715X / eISSN 1648-9179
2017  Volume  21(4): 384–400
doi:10.3846/1648715X.2017.1409290
*	Corresponding author. E-mail: bscmhui@polyu.edu.hk
THE EFFECT OF BEAM PLUS CERTIFICATION ON PROPERTY PRICE IN 
HONG KONG
Eddie C. M. HUI a,*, Cheuk-kin TSE a, Ka-hung YU a
a Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China
Received 23 June 2015; accepted 2 March 2017
ABSTRACT. In response to the public’s increasing awareness of sustainable development, the con-
struction industry has introduced “green” buildings which emphasize better environmental perfor-
mance. However, as a building’s environmental performance is difficult to discern for laymen, different 
green building certifications have been established for evaluations in this regard. This study evaluates 
whether there exists a price premium for living space in buildings certified with BEAM Plus. The find-
ings show that the prices of flats in BEAM Plus-certified buildings are 4.4% higher than those in non-
registered buildings, and that housing units in buildings with an “unclassified” rating are transacted at 
a discount of 5.9%. Nevertheless, if homebuyers mistake an “unclassified” building for a non-registered 
building, due to the non-disclosure of the “unclassified” result by developers, the price premium of 
BEAM Plus certification becomes higher (6.2%). Regardless, the price premium is much lower than 
those on the office sector. The reasons behind such differences can be attributed to the disparities in 
the tangible and intangible benefits associated with green living space and green office space. Policy 
implications with reference to Hong Kong’s GFA concession policy are then discussed.
KEYWORDS: Hong Kong; Green building certification; BEAM Plus; Residential property price
SUPPLEMENTARY MATERIAL associated with this article can be found, in the online version, at 
https://doi.org/10.3846/1648715X.2017.1409290
1. INTRODUCTION
As the notion of sustainable development has be-
come increasingly popular since the early 1990s 
(Gibbs et al. 1996), more customers have placed a 
higher degree of importance on environmental pro-
tection than on economic growth (Mainieri et al. 
1997). As a result, the demand for goods and ser-
vices with lower environmental costs has soared. 
To put it differently, there exists a willing-to-pay 
(WTP) premium for these products over regular 
products. In response, companies in various busi-
ness sectors have begun to take environmental 
considerations into account in their business op-
erations (Berry, Rondinelli 1998), as well as pro-
duction and marketing plans (see Hawken 1993; 
Stigson 1998; Gonzalez-Benito, J., Gonzalez-Beni-
to, O. 2005). This results in an expanding market 
for eco-friendly products (and services) on a global 
scale (Fuerst, McAllister 2011).
Such emphasis on the preservation of the envi-
ronment has generated an even more profound im-
pact to the practices of the construction industry, 
given the environmental impact incurred in the 
daily operation of buildings. Hong Kong’s electric-
ity consumption has been gradually rising in the 
last decade (Fig. 1). In 2014, the vast majority of 
electricity was used for the operation of either com-
mercial buildings or residential buildings (Fig. 2), 
in particular on space conditioning (Fig. 3). The 
soaring electricity consumption has serious impli-
cations on the environment, in that electricity gen-
eration alone contributed to over 68% of all green-
house gas emissions in Hong Kong in 2013, accord-
ing to the Environmental Protection Department. 
Based upon these statistics, it is reasonable to say 
that, should buildings be more energy efficient, 
greenhouse gas emissions in Hong Kong could be 
significantly reduced. In view of this development, 
the concept of “green buildings”, which emphasizes 
eco-friendly building design and higher efficiency 
in the use of energy, water, and other resources, 
has been preached as the blueprint of sustainable 
development, and used as one of the major market-
ing tools for development projects in Hong Kong.


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392
E. C. M. Hui et al.
Of the 646 housing units in the data sam-
ple used for this study, 54.3% of them are pre-
sale flats and the remaining 45.7% are occupied 
flats. As seen in Table 5, for the full sample, the 
transaction price of the housing units in the sam-
ple ranges from 2.2 million HKD to 9.13 million 
HKD, with an average of approximately 4.65 mil-
lion HKD. The majority of them were transacted 
at more than 4 million HKD (60.1%). The aver-
age floor area of these flats is 359.6 sq. ft, with 
the smallest housing unit at 193 sq. ft. and the 
largest flat at 717 sq. ft. More than 60% of the 
Table 5. Descriptive statistics of residential units in the sample
Full sample
Pre-sale flats
Occupied flats
Transaction price (in HKD)
3 million or less
8.2
0.9
16.9
3.01–4 million
31.7
24.5
40.2
More than 4 million
60.1
74.6
42.9
Maximum (in million HKD)
9.13
9.13
8.70
Minimum (in million HKD)
2.20
2.90
2.20
Mean (in million HKD)
4.65
4.96
4.28
Standard deviation (in million HKD)
1.42
1.37
1.79
Floor area (in square feet)
200 or less
3.9
7.1
0
201–400
63.8
68.1
58.8
401–600
29.2
24.8
34.5
More than 601
3.1
0
6.8
Maximum
717
577
717
Minimum
193
193
241
Mean
359.61
331.32
393.16
Standard deviation
114.73
96.08
125.66
Floor level
1st–10th
30.1
29.3
31.1
11th–20th
35.2
38.8
31.1
21st–30th
28.7
30.5
26.7
31st–40th
4.2
1.4
7.4
41st or higher
1.7
0
3.7
Maximum
45
33
45
Minimum
3
3
3
Mean
17.2
16.4
18.1
Standard deviation
8.76
7.60
9.89
Age of Building
5 years or less
N.A.
69.6
6–10 years
27.7
More than 10 years
2.7
Maximum
11
Minimum
0
Mean
4.71
Standard deviation
2.41
Other characteristics
Accessibility to MTR station
62.1
76.6
44.9
Located in Cheung Sha Wan
8.4
4.6
12.8
BEAM Plus certification
Assessed
42.2
77.8
0
Provisional Platinum rating
0
0
0
Provisional Gold rating
8.7
16.0
0
Provisional Silver rating
2.5
4.6
0
Provisional Bronze rating
18.4
33.9
0
Unclassified
12.7
23.4
0
Registered but not assessed
12.1
22.2
0


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393
The effect of BEAM Plus certification on property price in Hong Kong
sampled residential flats are within 201–400 sq. 
ft. The highest flat in the sample is on the 45th 
floor whereas the lowest one is on the 3th floor. On 
average, the floor level of the residential units is 
17.2, and more than 65% of them are on the 20th 
floor or lower. In addition, 62.1% of all flats in the 
data sample are within 5-minute walking distance 
to the MTR station, and less than 10% of them are 
located in Cheung Sha Wan. Lastly, 53.3% of the 
flats in the sample are located in buildings which 
have been registered under BEAM Plus, and 42.2% 
of them in already-assessed buildings.
As for the pre-sale housing units and the occu-
pied housing units in the sample, the transaction 
price of the pre-sale flats is higher than that of the 
completed flats. Almost three quarters of all pre-
sale flats were sold at more than 4 million HKD, 
while only 42.9% of the occupied flats were trans-
acted at the same price range. By contrast, the av-
erage size of the pre-sale flats is smaller than that 
of the occupied flats. While close to 70% of pre-
sale flats in the data sample are 201–400 sq. ft., 
the percentage of occupied flats with similar floor 
area is less than 60%. Also, the mean floor level 
of the pre-sale flats is slightly lower than that of 
the occupied flats as well. The average age of the 
occupied flats is 4.7 years, with the oldest being 
11 years old and the newest only occupied for less 
than half a year. A much larger proportion of pre-
sale flats in the data sample are within 5-minute 
walking distance to the MTR station, compared 
to the occupied flats, while a larger percentage 
of occupied flats are located in Cheung Sha Wan. 
Regarding BEAM Plus certification, however, it 
should be noted that all of the BEAM-Plus-regis-
tered flats in the sample are pre-sale. 78% of these 
flats are located in buildings that have already 
been assessed under BEAM Plus, and the highest 
proportion of them are within buildings certified 
with a Provisional Bronze rating.
As this study concerning the price impact of 
BEAM Plus certification on residential flats in 
Hong Kong, relevant data which captures the 
structural attributes, neighborhood attributes, and 
BEAM Plus certification attributes is required. The 
data comes from three sources. The first source is 
the property transaction database compiled from 
the Economic Property Research Centre (EPRC), 
in which all property transactions recorded by the 
Hong Kong Land Registry since 1991 are avail-
able. In these records, information concerning the 
structural attributes and neighborhood attributes 
of the transacted properties, such as transaction 
price, floor area, floor level, name/age/address of 
the building in which the sampled housing flat 
is located, is provided. Nevertheless, it should be 
noted that, though critical, some elements of these 
transacted housing units are not included in the 
EPRC database, for instance the quality of build-
ing and design quality.
The second source of data is the Rating & Valua-
tion Department (RVD). As noted in the paragraph 
above, only the transaction price at the time when 
a housing unit was sold is included in the transac-
tion records within the EPRC database. However, 
if this raw price data is incorporated into the em-
pirical model, the property price trends over time 
would be overlooked, and the results would likely 
be distorted. To take this property price trend into 
consideration, the raw price data is needed to be 
adjusted with reference to Hong Kong’s residential 
housing price trends over time. Thus, the RVD’s 
property price index (SM4.2) is used for the com-
putation of the adjusted transaction price of the 
sampled housing units.
Most importantly, for information about the 
sampled buildings’ status with reference to BEAM 
Plus certification (or registration) we rely on two 
sources: 1) the BEAM Society and 2) the HKGBC. 
While the former generally provides technical in-
formation concerning BEAM Plus itself, the lat-
ter’s official website proffers other important in-
formation such as the most updated BEAM Plus 
certification/registration statistics by sector (and 
the status of registered buildings).
As for the methodology, the hedonic price mod-
el is used. The conceptual framework behind this 
model is derived from Rosen’s (1974) framework in 
which a variety of products are differentiated and 
their utility-bearing attributes valued. Within the 
context of housing, Malpezzi (2002) points out that 
the hedonic equations can decompose the value of 
housing into measurable prices and quantities, 
and that the resultant regression coefficients may 
be transferred into the implicit prices of various 
housing attributes.
Regarding the variables required for this in-
vestigation, the dependent variable in the model 
is the per square metre transaction price of the 
sampled housing units, adjusted with respect to 
the general property price indices when a housing 
unit was transacted. It should be noted that, the 
model follows a semi-log specification, in that the 
(adjusted) per square metre transaction price in 
natural log form (LnPPSM) is also deployed. The 
reason behind such a specification is twofold. First, 
the interpretation of the results is more straight-
forward, as the price premium generated from the 


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396
E. C. M. Hui et al.
ANOVA test results, which indicate that the null 
hypothesis is rejected at 5% level for all four mod-
els, and that the models are considered statisti-
cally significant.
For Model 1, the findings first illustrate that 
BEAM Plus certification is statistically significant 
(within 1% level) in explaining the transaction 
price of the sampled properties. The coefficient is 
positive, which means that a housing unit located 
in a BEAM-Plus-certified building is transacted 
at a price about 4.4% higher than a similar hous-
ing unit located in a non-registered building. This 
is consistent with the literature, in that green 
building certification generates additional price 
premium for housing units. Model 1 also reports 
a statistically significant (within 1% level) rela-
tionship between UNCL and property price per 
square metre. The negative coefficient suggests 
that, holding other variables constant, a housing 
unit located in a building with an “unclassified” 
rating under BEAM Plus is sold at a discount of 
5.9% when compared with similar housing units in 
non-registered buildings. This finding is consistent 
to those in recent studies on the EPC (Fuerst et al. 
2015, 2016). Viewing these two findings together, 
it can be said that there exists a 10.3% difference 
in price between a housing unit in a certified build-
ing and a similar flat in a registered building with 
an “unclassified” rating.
As for the structural attributes, the findings in-
dicate that a flat’s saleable area has a significant 
relationship with it’s (per square metre) transac-
tion price. The coefficient suggests that, for every 
1% increase in saleable floor area, a flat’s (adjust-
ed) transaction price per square metre would be 
0.005% lower. Another factor found to be nega-
tively related with transaction price is age. Using 
pre-sale flats as the base case, it is reported that 
the older the building in which a housing unit is 
located, the lower per square metre price it has. 
Specifically, the price per square metre of a hous-
ing unit in a building which has been completed 
for 5 years or less is 18.5% lower than that of a 
pre-sale housing unit. The discounts in price for 
housing units in buildings that are 6–10 years old 
and more than 10 years old are 23.8% and 32.4%, 
respectively. This is in line with the expectation 
in the relationship between property price and 
the age of residential buildings. By contrast, the 
floor level dummy variables are all positively re-
lated (significant at 1% level) in explaining the 
per square metre transaction price of the sampled 
housing units. Using flats on the 10th floor or be-
low as the base case, it is found that flats are sold 
at prices approximately 3% (11th to 20th floor), 9% 
(21st to 30th floor), 15.4% (31st to 40th floor), and 
19.9% (41st floor or above) higher. This is consist-
ent with the expected relationship between floor 
level and property price.
Lastly, for the neighborhood attributes, the 
findings reveal that better accessibility, as expect-
ed, results in higher property prices, as a residen-
tial unit’s proximity to MTR station (i.e. 5-minute 
walking distance) is found to incur a price premi-
um of 2.8% when compared to others, controlling 
for the effects of other variables. The NSSP vari-
able, likewise, is statistically significant within 1% 
level, in that a residential unit located in Cheung 
Sha Wan, is about 24.2% more costly than a sim-
ilar flat located in Sham Shui Po, holding other 
variables constant.
For Model 2, without UNCL as a control vari-
able, the resultant transaction price premiums/dis-
counts differ in all categories with the exception 
of floor area, even though their signs are identi-
cal. The findings show, first, that the coefficient 
for the CERTIFIED variable becomes noticeably 
higher, in that a housing unit in a BEAM-certified 
building is 6.2% more expensive than another flat 
with identical characteristics in a non-registered 
building.
Then, for the structural attributes, the nega-
tive price impact of a residential building’s age 
Table 7. The results from the hedonic pricing models
Model 1
Model 2
Constant
12.110**
12.062**
BEAM Plus certification attributes
CERTIFED
0.044**
0.062**
UNCL
–0.059**
Structural attributes
AREA
–0.005**
–0.005**
5 years or less
–0.185**
–0.157**
6 to 10 years
–0.238**
–0.203**
More than 10 years
–0.324**
–0.295**
11th to 20th floor
0.030**
0.031**
21st to 30th floor
0.090**
0.091**
31st to 40th floor
0.154**
0.153**
41st floor or above
0.199**
0.188**
Neighborhood attributes
MTR
0.028**
0.051**
NSSP
0.242**
0.250**
N
646
Adjusted R-square
0.800
0.796
F-statistic
216.095
229.644
Note: ** denotes significance at 1% level; and * at 5% level.


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397
The effect of BEAM Plus certification on property price in Hong Kong
is not as prominent as it is in Model 1. Using 
pre-sale housing units as the base case, the price 
discounts for flats located in older buildings are 
15.7% (5 years old or less), 20.3% (6–10 years old), 
and 29.5% (more than 10 years old), respectively. 
By contrast, using flats on the 10th floor or below 
as the base case, flats on lower floor levels (11th–
30th floor) carry a slightly higher price premium 
compared to Model 1 (3.1–9.1%), whereas those on 
higher floor levels (31st floor or above) result in 
slightly lower price premium (15.3–18.8%).
Lastly, for the neighborhood attributes, the re-
sultant price premium for a flat with accessibility 
to either Sham Shui Po MTR station or Cheung 
Sha Wan MTR station, at 5.1%, is noticeably 
higher than that in Model 1 (2.8%). Also, a flat 
located in Cheung Sha Wan is, on average, sold at 
a per square metre price about 25% higher than a 
similar flat in Sham Shui Po, compared to 24.2% 
in Model 1.
6. CONCLUSION AND POLICY 
IMPLICATIONS
This study has evaluated the price effect of BEAM 
Plus certification on flats in sixteen residential de-
velopments within the Sham Shui Po – Cheung 
Sha Wan district. The findings first show that the 
prices of flats in BEAM Plus-certified buildings are 
4.4% higher than those in non-registered build-
ings, and that flats in buildings with an “unclas-
sified” rating under BEAM Plus are transacted at 
a discount of 5.9%. To put it differently, the price 
difference between a BEAM-Plus-certified flat and 
a similar flat in an “unclassified” building amounts 
to 10.3%. Nevertheless, this is only the case when 
homebuyers are informed of the actual status of a 
residential development with respect to its BEAM 
Plus assessment (including the “unclassified” rat-
ing). For less-informed homebuyers, however, 
since property developers only disclose information 
about a development’s participation in BEAM Plus 
assessment when it is certified, it is very likely 
that these buyers would mistake an “unclassified” 
building for a non-registered building. Then, the 
price premium of BEAM Plus certification becomes 
higher (6.2%). In other words, the non-disclosure 
of BEAM Plus assessment results of “unclassified” 
buildings on the part of the developers would lead 
to over-valuation of price premium.
Regardless, considering the additional cost (2%) 
required for the construction of green buildings 
(Kats 2003, 2006; Morrison Hershfield 2005; Ber-
ry 2007), the price premium as a result of BEAM 
Plus certification suggests that developers may 
find it profitable, or at least financially viable, to 
“go green” in response to the market demand for 
green living space. From another perspective, the 
price premium obtained via BEAM Plus certifica-
tion (4.4–6.2%, depending on model specifications) 
are generally on par with those found in the resi-
dential sector (Chegut et al. 2010; Shimizu 2010; 
Deng et al. 2012; Hyland et al. 2013; Jayantha, 
Man 2013; Brounen, Kok 2011; European Com-
mission 2013; Heinzle et al. 2013; Deng, Wu 2014; 
Kahn, Kok 2014; Fuerst et al. 2015, 2016; Bond, 
Devine 2016; Bruegge et al. 2016), but much lower 
than those found in the office sector (Miller et al. 
2008; Fuerst, McAllister 2008, 2009, 2011; Eich-
holtz et al. 2008, 2009, 2010, 2013; Murray 2008; 
Pivo, Fisher 2009; Wiley et  al. 2010; Reichardt 
et al. 2012; Chegut et al. 2014; Kok, Jennen 2012). 
While some of the benefits are applicable to own-
ers of residential space and of office space, such as 
higher rents (or returns), lower holding costs, and 
lower risk premium (see Fuerst, McAllister 2008, 
2011; Aroul, Hansz 2012), the reason behind the 
disparities in price premium between the two sec-
tors can be attributed to the differences in the tan-
gible and intangible benefits associated with green 
living space and green office space. For the tangi-
ble benefits, approximately 55% of all electricity 
consumed in Hong Kong’s office sector in 2014 was 
on space conditioning, compared to around 35% in 
the residential sector (Fig. 3). Therefore, the daily 
operating costs, in terms of electricity consump-
tion, for office use are much larger than those for 
residential use. Operating in a building with bet-
ter environmental performance would reduce the 
consumption of electricity, thus lowering operating 
costs for businesses. The improvement in energy 
costs for occupiers of living space in green build-
ings, in comparison, would not be as remarkable. 
For the intangible benefits, while the manufactur-
ing sector can illustrate its commitment to sus-
tainability by producing environmental-friendly 
products, such commitment is not as noticeable for 
non-manufacturing sectors. Therefore, one way to 
showcase this commitment, and thus boost corpo-
rate image, is to move their offices to green build-
ings. By contrast, even though buyers of green 
living space may take the “feel good” factor into 
consideration, this factor does not translate into 
business opportunities that an enhanced corporate 
image does.
The findings in this study have some implica-
tions regarding the GFA concession policy. This 
policy, on paper, provides some extra incentives