Green Retrofitting Costs and Benefits: A New Research Agenda

Since the introduction of the Green Mark Scheme in Singapore in January 2005, more than 650 projects have been awarded the Green Mark Award. In fact, from 2008, all new buildings must achieve the mandatory standard of a certified green building. However, the challenge is how to convert the existing stock of buildings in order for them to achieve the green mark standard. This study is motivated by the large number of existing non-green commercial properties and the need to convince owners and occupiers the benefits of green retrofitting. The paper examines the costs and benefits of retrofitting existing commercial buildings and analyzes their implications for owners and occupiers. From the sample of about 20 retrofitted green commercial buildings and a similar number of non-green buildings, a comparative analysis is undertaken to examine costs and benefits of green retrofitting. The cost of retrofitting existing green commercial properties to achieve green mark certification is found to be relatively insignificant when compared to the cost of new build or as a percentage of their capital values. The benefits are mainly achieved through the reduction in energy consumption and hence the savings in utility. This is then translated into savings in operating expenses and higher net income. To create awareness and incentivize owners, we propose new standards and guidelines for the valuation of green commercial properties. Other policy implications such as property tax incentives and cost subsidies are also examined. The paper concludes by raising some new research questions arising from our preliminary analyses.