The assessment of green premium variation across different development scales: case of apartment complexes in Seoul, South Korea

Abstract

Building sustainability has become a major objective in architecture due to buildings’ significant contribution to the environment degradation. Like many other nations, South Korea has inaugurated the Green Standard for Energy and Environmental Design (G–SEED) to address the issue of environmental loads caused by energy inefficient buildings. Due to the additional construction cost needed to obtain G–SEED certification, building stakeholders face challenges in deciding whether to invest in green building certification. In this study, we evaluate the existence and magnitude of the G–SEED price premium in Seoul, one of most densely populated cities in South Korea. We applied the hedonic pricing model to an extensive dataset of all housing transactions made during 2018 in all 25 districts of Seoul. Our findings indicate that the average price premium for a G–SEED certified apartment is 24.3%, with the premium being 18.3%, 31.0%, and 54.6% for small, medium, and large apartment complexes, respectively. We conclude that although the additional cost required to meet G–SEED certification criteria increases with the size of the development; green investment is profitable at all scales considered in this study.