Integrating Sustainability Metrics into Property Valuation Models: Evidence from Emerging Real Estate Markets (Published)
The increasing global emphasis on sustainability has significant implications for the real estate sector, particularly in the context of property valuation. However, the integration of sustainability metrics into valuation practice remains limited in emerging markets such as Nigeria, where traditional methods dominate and data constraints persist. This study aims to develop and empirically test a framework for incorporating sustainability metrics into property valuation models. The study adopts a quantitative research design based on the hedonic pricing model, extended to include a composite Sustainability Index (SUS) constructed from observable property-level indicators such as energy efficiency, environmental quality, and climate resilience. Data were collected from residential property markets in Lagos, Abuja, and Port Harcourt, alongside survey responses from 160 professional valuers. Empirical analysis using Ordinary Least Squares (OLS) regression reveals that sustainability has a positive and statistically significant effect on property values. The results indicate the presence of a measurable green premium, with sustainability contributing meaningfully to price variation. Furthermore, the inclusion of sustainability variables improves the explanatory power of the valuation model, suggesting that traditional approaches may underestimate property value by excluding sustainability considerations. Despite relatively high awareness of sustainability among valuers, the study finds limited practical integration into valuation processes, primarily due to data limitations, lack of standardized guidelines, and insufficient professional training. These findings highlight a critical gap between market dynamics and valuation practice. The study contributes to knowledge by developing a sustainability-integrated valuation model suitable for data-constrained environments. It provides practical implications for valuers, policymakers, and real estate stakeholders, emphasizing the need for improved data infrastructure, professional guidelines, and capacity building to support sustainable property valuation.
Keywords: Nigeria, Real Estate, Sustainability, green premium, hedonic pricing model, property valuation