1 . Introduction
Nowadays , there is widespread evidence that Green is going main stream . The energy efficient technologies in the built environment are growing rapidly ( Kok et al . 2011 ) and some real estate developers and governments are considering sustainable buildings already as a real opportunity . A growing number of online resources and articles show the environmental and social benefits of green buildings . It is widely recognized that energy efficient buildings lead to natural resource conservation , air quality improvement , waste reduction and health and productivity improvements . However , the picture is more complex when dealing with financial-economic advantages of building green since : the actors involved in the green projects include banking institutions . It implies precise knowledge of buildings ’ financial performance measures , there is a lack of knowledge about the cost the house would have as a conventional bricks-and-concrete building . This research attempts to analyze the financial benefits of sustainable buildings in developing countries by gathering the data from two small experimental mock-up buildings located in Malaysia . The two case studies allow the comparison among sustainable and conventional design , since the first is equipped with green elements , while the second one is a standard conventional building . Hence , the research aims to study the financial plan and profitability focusing on a specific house design . With this research , the authors like to answer the questions “ Is it profitable and financially sustainable investing in the two investigated buildings ? How does the financial model change according to the different project risk profile ? Is an investment in green or in conventional buildings more beneficial ?” Summarizing , this study aims to demonstrate in how far integrating “ sustainable ” or green building practices into the construction industry can be a solid financial investment . The trial is made via analysing primarily the profitability and the bankability of those capital projects .
2 . Literature Review
This paper will seek to compute the financial value and feasibility of a green building compared with a conventional one , looking at the building ’ s entire life cycle from the angle of three methods . The literature shows that , from a profitability perspective , a ) the Net Present Value ( NPV ) method is the most common project evaluation technique used for investment decisions . It examines the cash flow of a project over a given time period and compares it to one equivalent present date value . In general , a project is undertaken if the NPV is positive and , if two or more projects are alternatively considered , the project that has greater present value is selected ( Remer et . al . 1995 ).
( 1 )
A first crucial issue in using the NPV is the choice of the discount rate , also referred to as the minimum attractive rate of return ( MARR ). In the literature it is widely recognized that the Weighted Average Cost of Capital ( WACC ) is a good approximation of the MARR mainly for its ability to deal with levered capital and to incorporate the tax shield in the present value computation ( Farber et al . 2006 ).
( 2 )
100 ZEMCH 2015 | International Conference | Bari - Lecce , Italy