Exploring the Effects of Green Portfolio on REITs’ Return Performance in South Africa

Abstract

This paper investigates the extent of “greenness” of South African REITs; and whether green investments have any significant effects on the REITs return performance at the aggregate level. It used publicly-accessible green buildings and financial data obtained from the Green Building Council of South Africa’s (GBCSA) website and financial reports of 27 REITs that operate in South Africa, respectively. With only 11 REITs having green buildings in their portfolios, the results show phenomenal growth in the cumulative amount of green Gross Lettable Area (GLA) in under a decade – from a paltry 38,133 square metres of GLA in 2013, to over two million square metres of GLA in 2021. From panel analyses, consistent regression results show that green variables were positive and statistically significant across most of the estimated models. The statistically significant results imply that increased investments in green infrastructures have positive effects on REITs’ return performances. The study has implications for research and practice as far as the investments by REITs in green buildings in South Africa is concerned.