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