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Value influencing mechanism of green certificates in the discounted cash flow valuation

International journal of strategic property management, 2014-09, Vol.18 (3), p.238-252 [Peer Reviewed Journal]

Copyright © 2014 Vilnius Gediminas Technical University (VGTU) Press 2014 ;COPYRIGHT 2014 Vilnius Gediminas Technical University ;2014. This work is published under http://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 1648-715X ;EISSN: 1648-9179 ;DOI: 10.3846/1648715X.2014.940615

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  • Title:
    Value influencing mechanism of green certificates in the discounted cash flow valuation
  • Author: Vimpari, Jussi ; Junnila, Seppo
  • Subjects: Brand equity ; Cash flow ; Commercial real estate ; Discounted cash flow ; Discounted Cash Flow (DCF) valuation ; Economy ; Finance ; Green buildings ; Green certificate ; Office buildings ; Property value ; Property values ; Real estate industry ; Real property ; Valuation
  • Is Part Of: International journal of strategic property management, 2014-09, Vol.18 (3), p.238-252
  • Description: The market value of green properties is already acknowledged in scientific literature, but it has still remained unclear how green certificates are incorporated into property valuation. In this study, value influencing mechanism of green certificates in property investment is studied. A widely used discounted cash flow (DCF) model for property valuation was constructed and communicated with spreadsheet to industry professionals for valuing an office property in metropolitan Finland. The goal was to understand the value influencing mechanism and even deeper to identify the differences in DCF parameters between certified properties and non-certified properties. The results show that a green certificate increases on average the property value with 9.0% in the DCF valuation model. Improved yield and net rental income were the main reasons for the higher property value. Interestingly, this is the first known study to empirically open the value influencing mechanisms of green properties presented in earlier theoretical studies.
  • Publisher: Vilnius: Vilnius Gediminas Technical University
  • Language: English
  • Identifier: ISSN: 1648-715X
    EISSN: 1648-9179
    DOI: 10.3846/1648715X.2014.940615
  • Source: CEEOL: Open Access
    ProQuest Central
    DOAJ Directory of Open Access Journals
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