THE “GREEN VALUE” – A NEUROECONOMIC APPROACH TO UNDERSTANDING THE PREFERENCE FOR GREEN REAL ESTATE
||Pfrang, Dominique C.; Silke Wittig
||THE “GREEN VALUE” – A NEUROECONOMIC APPROACH TO UNDERSTANDING THE PREFERENCE FOR GREEN REAL ESTATE
||Book of Abstracts: 15th Annual European Real Estate Society Conference in Kraków, Poland
||During the last five years Earth has seen all-time records concerning the intensity, frequency, and damages of natural disasters. The real estate sector is increasingly considered to be one of the main sources of climate change: buildings are responsible for more than 40% of the final energy consumption, for 40% of total waste, for more than 16% of global fresh water demand, for 40% of raw material demand, and for 25% of lumbering. Facing a growing number of scientific evidence real estate actors cannot ignore their key role any more. Even though a general euphoric mood can be perceived in the branch, astonishingly, an all-embracing orientation towards sustainability and fast establishment of ecological measures has not yet taken place in practice. One of the main barriers is the uncertainty of professional real estate market participants concerning the effects of sustainability measures on the profitability of their real estate projects. While it is mostly acknowledged that it is possible to realize a reduction of a building’s operating costs through ecological measures, the tenants’ reluctance to pay a price premium for “green” space that exceeds their own energy cost savings is seen as a major hurdle. Even if some studies show a growing willingness of consumers to purchase “green” products, this trend has not fully reached the real estate markets yet. Following a neuroeconomic approach this paper tries to give an insight into tenants‘ decision-making regarding „green“ real estate products and to identify ways to foster the demand for sustainable buildings.
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