Why Reallionaires Are Chasing Green Real Estate?

Property investors who have successfully survived periods of economic downturns know its hard work to stay afloat in a down economy. Whereas, investors who have been financially battered have become increasing frustrated with buying traditional property assets. Generally, in times of economic hardship, traditional property assets tend to lose their appeal. However, it is only the average investors who tend to sit back and wait for the next boom economy, whilst the money making property investors switch to new real estate sectors.

Amidst the recent financial and economic chaos, reallionaires have been doing just that; switching their focus to new property sectors, in particular, green real estate. The green real estate sector can be defined as a convergence between green technology and the reinvention of ageing property assets, such as car parks reinvented into solar car park or EV re-charging stations. The green real estate 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 a few. An astonishing US$211 billion was invested in green tech and green real estate in 2010, up by US$51b on 2009 figures. As a result, green real estate is the most highly sort after real estate asset among real estate millionaires and there are some excellent reasons for this.

Firstly, reallionaires are putting their money in green real estate 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 real estate projects, but many financial institutions and private equity firms are also very keen to throw cash at such assets. As reported in the UK's Independent 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 green real estate assets to their property portfolio is due to the knowledge that it attracts near zero taxes and other types of investment incentives. Under Governments' legislation in the UK and Europe, investors operating in the green real estate sector pay less taxes, in comparison to their counterparts investing in mainstream commercial property. Green property assets, such as, recycling centres is almost a tax free investment. In other cases, investors benefit from other incentives, such as, tax rebate, tax 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 real estate assets because, unlike other property assets, it offers investors three to four sources of income. Generally most property assets give investors a rental income. However, green real estate provides investors with carbon credit income, feed in tariff income plus rental income. Reallionaires become mega rich by acquiring high performing assets that provide them with multiple streams of income.

To date, most of the richest real estate investors have bought into to the green real estate phenomenon. Reallionaires, such as, Samuel Zell, Vincent Tchenquiz, The Duke of Westmister and John Whittaker have all invested millions in this fast growing lucrative sector. To find out how you can get into the green property sector, email us for more details.