Investors Could Be Seeing Green With This Niche Real Estate ETF

Real estate might be all about location, but the renewable energy component could be adding itself into the valuation mix. Green energy buildings could present themselves as the next growth opportunity for niche real estate plays.

It’s an opportune time for investors looking to play real estate, especially with forthcoming headwinds of rising rates. Niche opportunities like green buildings can keep real estate investors in the game with their growth potency.

“The climate conversation has moved beyond fossil fuels to other big causes of emission,” a Money Control article says. “And the biggest among them are buildings which account for 39% of energy-related carbon dioxide emissions globally and 36% of global energy use, according to an estimate by the United Nations Environment Program.”

“Of this, about 11% of the emissions can be attributed to the materials used and the process of construction,” the article adds.

This, of course, opens up pathways for green energy construction. Research data already suggests that substantial savings can be had with their use.

“According to a few research, studies, and discussions with architects and developers on analyzing the financial costs and benefits of green buildings, one can expect an increase in upfront investment of about 5%-18% of construction costs to support green design, which can potentially lead to 12%-20% lower operational costs,” the Money Control article says further.

A Green Building ETF for Potential Growth

This potential growth opportunity can be encapsulated in the Global X Green Building ETF (GRNR). The fund seeks to invest in companies that are positioned to benefit from increased demand for buildings that reduce or eliminate negative impacts and/or create positive impacts on the natural environment, including companies involved in green building development, green building management, and green building technologies and materials.

GRNR offers investors:

  • High growth potential: Forecasts suggest that the global green building materials market could more than double between 2020 and 2028 (from $256 billion to $653 billion), highlighting one of several growth opportunities among the categories that GRNR invests in.
  • Sustainable theme: Green buildings typically have smaller carbon footprints and less water and energy waste. These qualities may be appealing as sustainability is more widely embraced.
  • Conscious approach: GRNR incorporates environmental, social, and governance (ESG) screens and follows ESG proxy voting guidelines to affect positive change alongside financial returns.

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