-ESG / SDG`s and Property Market

Sustainable Property Market

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Center for Spatial Information Science, The University of Tokyo5-1-5, Kashiwanoha, Kashiwa 277-8568, JAPAN

Sustainable Property Market-ESG / SDG`s and Property Market-

March 30, 2021

Franz Fuerst & Chihiro Shimizu

ARES Journal


ESG and Property Market

• In property investment, attention to environment, society, and governance or ESG has increased. In the 21st century, interest in global warming has increased, and various efforts have been made towards realising a highly sustainable society.

• In the second decade of the 21st century, the onset of the Biden administration in the United States triggered a major shift in Japan towards a low-carbon or carbon-free society.

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Ⅰ. Motivation of Research in Sustainable Property.

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Green Premium in Green Property

• Yit : Rent income after deduction of expenses• ↑ Environmentally Friendly Property

• Rp : Risk premium• ↓ Reduction of liquidity risk and finance risk

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GRRyp

pift

itit −+=



Ⅱ. Economic Premium of Green in “Property” Market.

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Great Kanto Earthquake, 1923

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• The Kanto earthquake occurred on September 1, 1923, mainly in the southern Kanto region(Tokyo). It killed 105,000 people.


Great Hanshin-Awaji Earthquake, 1995

• On January 17, 1995, a major earthquake struck near the city of Kobe, Japan, killing more than 6,432 and making more than 45,000 people homeless.

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Damage to Kobe City Hall Damage to reinforced concrete building

Damage to wooden building


Great East Japan Earthquake,2011• The Great East Japan Earthquake is a disaster caused by the 2011

off the Pacific coast of Tohoku Earthquake that occurred on March 11, 2011, and the accompanying accident at the Fukushima Daiichi Nuclear Power Station. Due to the tsunami and fire, more than 22,000 people were killed or missing in 12 prefectures.

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Adaptation to “Climate Change”: Flood Risk: Kumamoto heavy rain, 2020.• The total number of houses damaged by heavy rain was 592,

and the total number of houses was 8,256 including the inundation above and below the floor and the partial damage.

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IPD/IPF Sustainable Property Index (ISPI) UK

• To identify the more sustainable properties in the market, ISPI asks landlords 20 or so questions, easily answerable, based on the 6 categories of:

• -Building quality • -Building accessibility • -Energy efficiency • -Water efficiency• -Waste management • -Flood risk.

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Ⅲ. New Research Trend in “ESG and Property Market”.

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Hedonic Regression with Expected Flood Risk in Tokyo detached house market

Variabledependent var: ln(price) dependent var: ln(price per area)

Coef. Robust S.E. t Coef. Robust S.E. tln(parcel area) 0.140 0.004 36.21*** 0.140 0.004 36.21***ln(building area) 0.669 0.013 51.49*** -0.331 0.013 -25.5***ln(building age) -0.134 0.001 -168.3*** -0.134 0.001 -168.3***ln(dist. to the nearest station) -0.110 0.001 -97.18*** -0.110 0.001 -97.18***ln(dist. to CBD) -0.424 0.002 -242.79*** -0.424 0.002 -242.79***below 1LDK dummy 0.054 0.009 6.02*** 0.054 0.009 6.02***2LDK to 3DK dummy 0.064 0.004 18.17*** 0.064 0.004 18.17***3LDK to 4DK dummy 0.062 0.002 34.48*** 0.062 0.002 34.48***above 4LDK dummy (baseline) (baseline)wooden structure dummy -0.155 0.008 -19.5*** -0.155 0.008 -19.5***planning regulation area dummy 0.293 0.004 77.78*** 0.293 0.004 77.78***expected flood 0 (baseline) (baseline)expected flood 0-0.5 -0.136 0.002 -55.14*** -0.136 0.002 -55.14***expected flood 0.5-1.0 -0.105 0.003 -39.68*** -0.105 0.003 -39.68***expected flood 1.0-2.0 -0.123 0.002 -53.58*** -0.123 0.002 -53.58***expected flood 2.0-5.0 -0.172 0.003 -68.64*** -0.172 0.003 -68.64***expected flood 5.0- [m] -0.208 0.017 -12.51*** -0.208 0.017 -12.51***const. 18.530 0.060 310.79*** 18.530 0.060 310.79***R-squared 0.5975 0.5897RMSE 0.27587 0.27587max VIF 1.96 1.96mean VIF 1.21 1.21

Notes. statistical significance, *** 0.1%, ** 1%, * 5%; Coef. = Coefficient; S.E. = Standard Error


Ⅳ. Property investment industry and ESG or SDG's.

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Ⅴ. Key Drivers of property investment market in future

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CSIS-The University of Tokyo | CRERC University of Cambridge

Joint Workshop Series on Sustainable Property MarketsJune 25th, July 23rd, and August 27th, 2021 • Online

• The University of Tokyo (Center for Spatial Information Science)and The University of Cambridge (Cambridge Centre for RealEstate Research) are jointly organizing a series of online workshopswith a focus on sustainable property markets. The workshop serieswill feature in-depth paper presentations and aims to stimulatediscussions among presenters, assigned discussants, and otherparticipants.

• The Organizing Committee would greatly appreciate anysubmissions on the topics of sustainable or green real estate, theeconomics of energy efficiency in buildings, climate changemitigation and adaption as well as the broader role of real estatemarkets in a sustainable society. Papers will be selected based on acompetitive review process. Papers and discussant contributions arewelcome from both established and junior researchers.

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-ESG / SDG`s and Property Market