From scarcity premium to market standard: what 20 years of Singapore office transactions (2005-2025) tell us

Key Takeaways

• Green-certified offices sold at an estimated 13% to 28% premium from 2005 to 2014; a period when only 9% of transacted offices were green-rated. The finding was directionally consistent across the main model specifications.
• After 2014, the premium was no longer statistically detectable. From 2015 onwards, green-certified offices sold for roughly the same price as comparable non-certified ones.
• No measurable brown discount in 2023-2025. Non-certified offices did not trade at a measurable price penalty relative to their green-certified peers in 2023-2025, although the recent sample limits our ability to detect smaller price differences.

Introduction

In 2005, Singapore’s Building and Construction Authority (BCA) launched the Green Mark scheme, making the city-state one of Asia’s earliest adopters of green building standards. Two decades on, green certification has become a significant feature of Singapore’s office market.

Green certification was once a badge carried by a handful of landmark towers. Today, it has become part of the baseline for institutional-quality office buildings.

As green certification becomes the baseline, a direct question arises for property investors and developers: does being green still command a price premium[1]?

We analysed office sale transactions in Singapore between 2005 and 2025. After accounting for building grade, location and market conditions, we found that a meaningful premium existed when green buildings were scarce. It was no longer statistically detectable as certification became more widespread.

The premium was real – but confined to the scarcity era

In our baseline model, green-certified offices sold at a 28% premium over comparable non-certified ones during 2005-2014, when just 9% of transacted offices held Green Mark certification.

After 2014, the premium was no longer statistically detectable. The estimates were small, varied in direction and were indistinguishable from zero.

Unpacking the early premium

The 28% premium during the scarcity era likely captures more than the “green effect” alone. This period coincided with a strong office market upcycle, particularly after the Global Financial Crisis.

The estimated premium fell to 13% after adjusting for market conditions using the Urban Redevelopment Authority (URA) Office Property Price Index.

This suggests that broader market conditions explained part of the observed premium. Even after adjustment, the estimate indicates a meaningful premium when green buildings were scarce.

The early premium was evident across both Grade A and non-Grade A transactions, suggesting that it was not confined to the prime office segment.

What may explain the change?

One explanation is that the supply of green-certified offices caught up with demand. When green certification was rare, it may have signalled superior quality and better operational efficiency. Tenants and investors with ESG mandates may therefore have been willing to pay more.

As the Green Mark scheme matured, certification shifted from a competitive advantage to a market norm. By 2015, more than half of the transacted offices were green-rated. This share reached 73% by 2023.

No measurable brown discount – yet

We found no statistically detectable brown discount in 2023-2025. The estimated green premium was 1%, but this was not statistically significant.

The finding may partly reflect the composition of the remaining non-green stock, which is increasingly older and of lower quality. After accounting for these characteristics, the models do not identify a separate price penalty associated with the absence of green certification.

However, tightening energy performance standards and evolving occupier requirements could weigh on the relative competitiveness of non-certified buildings over time. The absence of a penalty today does not guarantee immunity tomorrow.

Implications for stakeholders

For investors

Our analysis found that green certification on its own is no longer associated with a measurable price premium in Singapore’s office market. This has implications for investors pursuing the “brown-to-green” playbook of acquiring an unrated asset, investing to upgrade it, and exiting with a certified one. Certification alone is now less likely to deliver the exit premium it once did when green-certified assets were scarce.  

For developers

Differentiation must extend beyond basic green certification.

The competitive frontier is moving towards higher-tier certifications such as Green Mark Platinum and Super Low Energy, alongside health and wellness credentials and digital resilience. These attributes may underpin the next generation of premiums, much as basic Green Mark certification once did.

For landlords of non-certified assets

Our analysis found no measurable price discount for non-certified buildings in 2023–2025. That position may not endure.

Regulatory momentum points towards stricter requirements, including higher energy performance standards, mandatory disclosures and energy improvement plans. Landlords who delay retrofitting may face a growing risk that their assets become less competitive as policies and occupier requirements tighten.

What does this mean for the market?

Singapore’s office market tells a clear story. When green certification was scarce, green-certified offices sold at an estimated premium of 13% to 28%. The premium was no longer statistically detectable as certification became more widespread. Today, green is increasingly the baseline.

Sustainability still matters in real estate. What has changed is where its value shows up. Occupancy, operating performance and resilience to tightening regulation sit outside the scope of this study, and they are increasingly where the returns to sustainability are likely to be found.

Building owners and investors therefore need to consider how far they should exceed the current sustainability baseline to remain competitive.

For advice on valuation considerations for office assets, contact our Valuation and Advisory team. For Green Mark certification support and energy audits, contact our Energy and Sustainability Management team.

Data, methodology and limitations

Our data comprise office sale transactions exceeding S$10 million between 2005 and 2025, sourced from Real Capital Analytics.

We applied a hedonic pricing model to estimate the relationship between green certification and price after accounting for differences in building grade, location and other property attributes.

There are several limitations. First, the sample limits our ability to detect smaller premiums or discounts. Second, our data do not distinguish certification tiers for modelling. Third, the analysis covers capital values only. Rental premiums and occupancy differentials fall outside our scope.

This article is produced by the Savills Valuation and Advisory department for informational purposes only. It is based on market transaction data and does not reference any specific client, property or valuation engagement. The findings should not be construed as investment or valuation advice for any particular property.