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Impact of energy performance on transaction prices: Evidence from the apartment market in Bucharest

Paloma Taltavull (Department of Applied Economics, University of Alicante, Alicante, Spain)
Ion Anghel (Department of Financial Analysis and Valuation, The Bucharest University of Economic Studies, Bucharest, Romania)
Costin Ciora (Department of Financial Analysis and Valuation, The Bucharest University of Economic Studies, Bucharest, Romania)

Journal of European Real Estate Research

ISSN: 1753-9269

Article publication date: 2 May 2017

210

Abstract

Purpose

This paper aims to estimate the green premium effect of retrofitted apartments in Bucharest and draw comparisons with international examples.

Design/methodology/approach

A geo-referenced transaction database including information on whether the property had been retrofitted is utilised. The paper uses two approaches to test the green premium. One is a hedonic model controlled by areas to estimate the price incentive of a green building. The second is a STAR GLS model evaluating the diffusion effect of house prices spatially by sub-market and assessment upon the pricing effect of green characteristics.

Findings

The authors’ findings suggest a green premium in two Bucharest areas of between 2.2 per cent and 6.5 per cent. Spatial diffusion effects are shown to contribute positively to house prices, but the unobserved spatial component reduces this effect.

Originality/value

This paper is the first to assess price impacts of green characteristics in Bucharest and one of the first analysing green premium using spatial techniques. The analysis is of significance to policymakers and real estate developers.

Keywords

Citation

Taltavull, P., Anghel, I. and Ciora, C. (2017), "Impact of energy performance on transaction prices: Evidence from the apartment market in Bucharest", Journal of European Real Estate Research, Vol. 10 No. 1, pp. 57-72. https://doi.org/10.1108/JERER-12-2016-0046

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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