The Value of Sustainable Property Management in Real Estate: Evidence From Hong Kong

Jianfu Shen, Kwok Yuen Fan, Eddie CM Hui, Sik Man Ho

Research output: Journal article publicationJournal articleAcademic researchpeer-review

Abstract

This study investigates whether sustainability in property management is valued by property buyers. Using a sample of 312,474 property transactions in Hong Kong from 2007 to 2021 and based on a hedonic pricing model, we find that the environmental, social, and governance (ESG) performance of property management companies is positively associated with housing prices, and that housing prices drop if property management companies experience ESG-related risk incidents. The results are robust when the sample is restricted to repeat-sales transactions and when using a location-based matching approach and an instrumental variable approach. Further analysis shows that housing prices increase with the social and governance performance of property management companies but not with their environmental performance. The negative effect of ESG incidents on housing prices increases if the incidents are reported by high-reach media. Homebuyers and nonlocal buyers are more willing to pay a premium for sustainability in property management than are real estate speculators and local buyers. Additional evidence suggests that ESG practices play a more significant role in affecting property value through lower risk or a higher rental income growth rate than through higher gross rents. Overall, this study provides evidence of the value of sustainable property management in real estate.
Original languageEnglish
JournalJournal of Real Estate Research
DOIs
Publication statusPublished - 20 May 2024

Fingerprint

Dive into the research topics of 'The Value of Sustainable Property Management in Real Estate: Evidence From Hong Kong'. Together they form a unique fingerprint.

Cite this