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- Dokumenttyp:
- Masterarbeit
- Autor(en):
- Thesis
- Titel:
- Green Buildings: Are they more resilient to economic downturns?
- Abstract:
- The existence of a price premium for green-certified office buildings is one of the most robustly replicated findings in real estate economics of the past two decades — but whether it survives periods of acute economic stress remains largely untested. This thesis addresses that gap directly. Using a proprietary dataset of 2,869 transaction-level observations from the Parisian institutional office market over the period 2011–2024, a window that encompasses a full real estate cycle and the acute phase of the COVID-19 shock, this study puts that question to its most demanding available test. The case for green certification in institutional real estate has historically rested on its ability to generate above-average returns under favorable market conditions. For long-horizon institutional investors operating under conservative mandates, however, the more consequential question is whether that premium holds when it matters most: when transaction volumes collapse and the composition of the buyer pool narrows. If the green premium compresses or disappears during periods of economic stress, the risk-adjusted case for environmental certification becomes considerably weaker than the normal-market evidence suggests. Conversely, if it persists or amplifies, green certification represents not merely a return enhancer but a risk management tool, a distinction with material implications for portfolio construction, asset appraisal, and policy design. The Parisian institutional office market is a particularly informative setting in which to test this. Paris is the largest office market in Europe by stock and the second largest investment market after Central London, dominated by long-horizon capital governed by Environmental, Social, and Governance (ESG) mandates and embedded in one of the most stringent regulatory environments in Europe. The Décret Tertiaire requires all commercial buildings above 1,000 square meters to achieve progressively increasing energy consumption reductions and publishes compliance results in a publicly accessible national information system, creating both a regulatory and reputational dimension to non-compliance. These structural features make Paris particularly favorable for the structural pricing hypothesis, and one where the conditions for a resilient green premium are firmly in place. The analysis is organized around four sequential hypotheses. H1 tests whether the green premium persists across both normal and crisis market conditions. H2 tests whether the crisis- period premium is differentially larger than the normal-period premium. H3 tests whether the premium is larger at mid-to-upper price quantiles during the crisis, consistent with a flight-to- quality mechanism. H4 tests whether green-certified buildings exhibit lower residual price dispersion during the crisis, consistent with a volatility-dampening effect. The hedonic specification controls for size, age, renovation, metro accessibility, and submarket and year fixed effects, with the crisis window defined empirically from observed transaction and price dynamics rather than calendar convention. The baseline hedonic price model, estimated on the full 2011–2024 sample returns a green premium of 18.9% (p < 0.001). This estimate is consistent with the European hedonic literature and reflects the depth of ESG-mandated institutional participation and the stringency of the French domestic regulatory environment that characterize the Parisian market. During the empirically validated COVID-19 crisis window, the premium remained positive and highly significant at approximately 22.7% (p < 0.001). A pre-trend test (p = 0.623) confirmed that the premium was stable in the years preceding the crisis and not contaminated by a pre- existing upward trend. A Chow test on the quarterly interrupted time series of hedonic residuals confirmed no structural break in the green premium trajectory at the onset of the shock (p = 0.632). Two separate tests, H1c (Wald test p = 0.363) and H2 (Wald test p = 0.776), both confirmed that the average crisis-period premium is statistically indistinguishable from the average normal-period premium. Rather than amplifying or eroding, the green premium survived the crisis intact. This finding is the core contribution of the thesis. A green premium that persists at its normal- market level through economic crises is one without a cyclical component, one that investors treat as a permanent attribute of the asset independent of market conditions. It is both more predictable in financial modeling and more consistent with the institutional ESG mandate framework that underpins demand for green-certified buildings. Mandates do not switch off during downturns, and the COVID-19 pandemic did not make them more demanding. The H1c result, read alongside the pre-trend validation and the Chow test, is therefore not a failure to detect amplification but a confirmation of structural pricing. Beyond the mean premium, directional evidence consistent with a flight-to-quality mechanism is found at the upper end of the price distribution. Quantile regression finds a positive interaction coefficient at τ = 0.75 (p = 0.055), suggesting that during the crisis, demand concentrated on the highest-quality certified assets — those transacting above approximately €75 million — sustaining and potentially amplifying their premium relative to non-certified comparables. At the lower end, where the buyer pool is thinner and less uniformly governed by ESG mandates, no equivalent pattern is detected (τ = 0.25: p = 0.822), consistent with general market withdrawal rather than quality differentiation. Levene’s test finds that green- certified buildings exhibited 55% lower residual price variance than non-certified buildings during the crisis (p = 0.090), consistent with the homogenization of the buyer pool toward ESG- mandated institutional participants. Both results are significant at the 10% threshold only and should be considered suggestive rather than conclusive, reflecting the limited statistical power of the crisis subsample (59 green- certified transactions during the crisis window). The coherence of the directional picture across three independent tests, H1c, H3, and H4, is nonetheless evidentially meaningful: all three point consistently toward the same underlying mechanism, theoretically coherent and empirically consistent. For practitioners, the structural nature of the premium implies that acquisition models need not apply a crisis-period discount to the green premium in downside scenarios, and that certified assets may warrant differentiated treatment in stress-testing frameworks. For policymakers, a premium that has survived an acute economic crisis without erosion reflects structural rather than speculative demand, precisely the kind of market signal that justifies sustained regulatory commitment. The literature on green premiums has spent the past two decades establishing that green certification adds value under normal economic conditions. This thesis demonstrates that it holds that value under abnormal conditions as well.
- Betreuer:
- Kaufmann, Valentin
- Jahr:
- 2026
- Sprache:
- en
- Hochschule / Universität:
- Technische Universität München
- Fakultät:
- TUM School of Engineering and Design
- TUM Einrichtung:
- Professur für Immobilienentwicklung
- Status:
- Abgeschlossen
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