Green Premium: Assessing the Influence of Sustainability Features on Real Estate Market Value in Delhi NCR

Abstract

The paper investigated the market value of the sustainability attributes of real estate assets in the Delhi NCR market, focusing mainly on the “green premium” concerning energy efficiency, water efficiency, sustainable material use, waste minimization, and green certifications. As urbanization proceeds with unprecedented rapidity in India, but more particularly in the National Capital Region, greater concern about sustainable development within a real estate context is required. Empirical research on the actual value impact which these features have on property price remains scant, however, especially in India. The present paper intends to fill this gap by analyzing the market value effects of a number of sustainability features of real estate developments. Quantitative in nature, the surveys were conducted by collecting data from 50–100 sustainable real estate developments in Delhi NCR, supported by secondary data from real estate websites and green certification bodies. Regression analysis was used to measure the association between sustainable features and property price. Results indicated that water conservation, energy efficiency, and green certification are the most influential determinants of property prices amongst the considered sustainable features, with energy-efficient features and green certification commanding the highest premiums. The qualities concerning sustainableness as well as waste management are medium-efficient but not as much as the other features. Developers, investors, and policy-makers would find this research useful. The ranking of certain sustainability attributes would therefore help developers to optimize market value while enabling policy-makers to design targeted incentives to stimulate green-building strategies. This study contributes to academic literature by creating a hedonic pricing model to identify the various dimensions of sustainability in the Indian real estate market. (29 words) These findings are crucially important to a sustainable built environment of the rapidly urbanizing cities of India.