The provision of balcony to the living room of a residential flat offers a number of merits including improved view enjoyment, enhanced ventilation and increased planting space. In addition, a balcony can act as an overhang and provide solar shading as well as electricity saving of the air-conditioning system. This paper reports the findings on the energy and environmental impact due to the provision of a balcony. In this study, a typical residential flat with balcony constructed at the living room was modeled and the energy performance was investigated with the use of the typical weather data set of a subtropical city, Hong Kong. The effects of balcony's orientation and glazing material of window were also evaluated. It was found that the residential flats facing various orientations (N, E, S,W, NE, SE, SW and NW) can offer substantial energy saving in air-conditioning system due to the shading effect of balcony. The building case with southwest facing balcony and clear glass glazed window gave the highest saving percentage of 12.3% in annual air-conditioning consumption. In terms of cost payback period, the values were estimated as 25.9 years (based on extra construction cost of a balcony) and over 100 years (based on extra purchasing cost), respectively. On the other hand, the energy payback period was 22.4 years for this building case. The provision of balcony to the living room of residential flat was found environmentally feasible in Hong Kong. (C) 2010 Elsevier B.V. All rights reserved.