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The value effects of green retrofits

Dirk Brounen (Tilburg University, Tilburg, The Netherlands)
Alexander Michael Groh (University of Regensburg, Regensburg, Germany)
Martin Haran (University of Ulster, Newtownabbey, UK)

Journal of European Real Estate Research

ISSN: 1753-9269

Article publication date: 24 September 2020

Issue publication date: 5 December 2020




This paper aims to decompose the value effects of green retrofits on commercial real estate. The paper disentangles various sources of value capture mechanisms that can be attained through green retrofit actions and profiles the extent to which green retrofit solutions can be effectively capitalised using transaction evidence from the Munich housing market. The insights offered can help real estate owners and investors during their ex ante analysis of future energetic retrofit investments.


The authors offer their reader both a conceptual framework and the results from an empirical analysis to identify the value effects of retrofits and the associating gains in energy efficiency. The conceptual framework theorises the different value components that a deep retrofit has to offer. The regression analysis includes a multivariate analysis of 8,928 dwellings in the Munich residential real estate market.


This study’s framework disentangles the total retrofit value effect into three components: the capitalisation of energy savings, the exposure to the value discount because of stricter standards and the value uplift because of indirect benefits (health, employee satisfaction, marketing etc.). The regression results indicate that the value gains because of energy efficiency improvements are in the range of 2.4–7.4%, while the indirect benefits and reduced exposure to stricter standards amount to another 3%.


While numerous studies have investigated the upside value effects of energy efficiency in the real estate sector, there is scant academic research which has sought to evidence the value of green retrofit solutions and the extent to which this can be capitalised. Instrumentalising the various value effects of energetic retrofit that have been identified is not straightforward. At the same time, inadequate value capture of energetic retrofit effects could delay intervention timelines or aborting of proposed retrofit actions which should be of primary concern to policymakers and stakeholders tasked with the decarbonisation of real estate assets.



The authors thank the European Commission for providing Horizon 2020 funding to the Carbon Risk Real Estate Monitor.


Brounen, D., Groh, A.M. and Haran, M. (2020), "The value effects of green retrofits", Journal of European Real Estate Research, Vol. 13 No. 3, pp. 301-319.



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