Model of demand and supply factors affecting green commercial properties

Abstract

In many countries including Malaysia and Nigeria, green building investment is still beset with uncertainties about the anticipated profits and benefits. Existing studies on green building seem much segmented and somewhat narrow focused, as such miss the inherent complexities in demand and supply. The existing studies seem to ignore the fact that green commercial building lie within the marketplace that is subjected to inter-dependent forces of demand and supply factors. The aim of this study is to establish a model of demand and supply factors affecting green commercial properties with focus on Malaysia and Nigeria. Structural Equation Modelling (SEM) methods were used to model the factors that have causal relationships with demand and supply of green commercial properties. Discriminant analysis method was used to determine if there are significant differences in perception between Malaysia and Nigeria real estate market participants on factors that influence the demand and supply, and if differences are observed, the highest discriminant value will be identified. The analysis was based on 496 valid questionnaires administered to real estate developers. The research findings revealed that factors affecting green commercial property demand and supply is an eight-causal factor structure model. The study revealed that green building supply is significantly dependent on green building demand. Economic and financial factors including personal and altruistic environmental factors had most influential effect on green building demand while available green skills and monetary green tax incentives exhibited the most causal effect on the supply side. The model was confirmed for convergent validity, discriminant validity, item reliability and construct reliability. On discriminant analysis, study revealed that overall, there were significant discriminant function that differentiated the two countries on their perception of factors that drive green building demand and supply. The variables with most discriminant power in accounting for the differences in perception were measures of economic and financial motivations for the demand side and life cycle cost saving motivation measures for the supply side. It is hoped the findings will have practical utility for green commercial property consumers, suppliers and investors who are seeking clearer explanations for commitment in green building, and green building policy makers in both Malaysia and Nigeria who are seeking workable strategies to incentivize green building demand and supply.