Finding Superior Returns in Green Portfolios: Evidence from Singapore REITs
We measure the proportion of green real estate in the asset portfolios of publicly traded real estate investments trusts (REITs) in Singapore (SREITs) using the Green Mark certification. We find that the portfolio greenness of SREITs increased from 3% in 2005 to 34% in 2017. The percentage of SREITs that have at least one property in their portfolio that is Green Mark certified had risen to 81% by end 2017. On the question of whether it is worthwhile for REITs to invest in green portfolio, we find that there is a significant relation between the “greenness” of the portfolio and its operating performance. Specifically, REITs with more green assets registered higher return on assets and operating margin. However, we did not observe any positive abnormal return (alpha) associated with portfolio greenness.