Why Are Reallionaires Chasing Green Real Estate Assets by iyusxyusuf


									     Why Are Reallionaires Chasing Green Real Estate Assets?

Real estate investors who have been battered by the 2007 financial crisis and subsequent
recession have become increasingly frustrated with buying traditional property assets.
Yet they remain in no man's land when making attempts to revive their fortune. To the
contrary, investors who have successfully survived the financial crisis, knows that in
times of economic turmoil, they must jump ship to stay afloat. As traditional property
assets lose their appeal, it is time to look elsewhere. Generally, the average investors
typically tend to sit back and wait for the next big booming economic wave. Whereas,
savvy property investors spend time creating that new wave in a safe boat.

During the rubble (or collapsed economic cycle 2007-2012), reallionaires have been
switching to new property sectors, in particular, green real estate, whilst novices are still
buying traditional assets. This newly emerging property sector, green real estate (GRE)
may be defined as a convergence between green technology and the reinvention of ageing
property assets, such as, car parks reinvented into solar car parks or EV recharging
stations. The green property sector consists of property assets, such as, solar farms, agro-
fuel estates, landfill gas sites, energy from waste facilities, solar car parks and bio-fuel
plantations to name just a few. An astonishing US$211 billion was invested in this asset
class in 2010, up by US$51b on its 2009 figures. As a result, green property is the most
highly sort after property asset among reallionaires and there are some lucrative reasons

For starters, reallionaires are putting their money into the green real estate sector because
it has pulling power when it comes to attracting capital. Not only are the World Bank and
Sovereign wealth funds lending millions to developers and owners of green property
projects, but many financial institutions and private equity firms are also throwing cash at
developers of such property assets. As reported in various UK's Newspapers, property
tycoon, Vincent Tchenquiz through his acquisition vehicle, Consensus Group, raised over
£71 million from sovereign wealth funds and institutional investors to acquire and
develop solar farms, wind farms and bio-fuel refineries in South Africa. Likewise, in
2010, Vattenfall secure £150m from the European Investment Bank to develop a wind
farm in Thurness Point, Kent UK.

Another reason why reallionaires are adding GRE assets to their property portfolio is due
to the knowledge that it attracts near zero taxes and other types of investment incentives.
It is now common knowledge, that the acquisition of green real estate is largely a tax free
investment. Under Governments' legislation in the UK and Europe, investors operating in
the GRE sector pay less taxes, in comparison to their counterparts investing in
mainstream commercial property. Additionally, capital gains tax is waived on most green
property assets, such as, recycling centres. Further, other benefits reallionaires accrue
from buying GRE, include, tax rebate, tax credit, carbon credit, Government loan
guarantees, grants and feed-in-tariffs. Such incentives and promotional policies helped in
making this sector recession proof over the last five years.
Third, but not last, reallionaies are in love with green property assets because, unlike
other assets, it offers property investors three to four sources of income. Generally most
property assets give investors a rental income (depending on the type of owner structure
used). Nevertheless, in addition to rental income, GRE provides investors with carbon
credit income and feed in tariff income. Reallionaires become mega rich by acquiring
high performing assets that provide them with multiple streams of income. To this end, it
is abundantly clear why reallionaires and other super rich investors are chasing green real
estate assets.

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