Analysis of the impact of green buildings on the financial indicators of REITS in Hong Kong, China

The construction sector’s adoption of massive development strategies unavoidably inflicts harm upon the environment. However, as societal awareness of environmental preservation increases, the popularity of green buildings also increases. Concurrently, the proliferation of Real Estate Investment Trusts (REITs) presents the construction industry with additional avenues for advancement. This study delves into the landscape of listed REITs in Hong Kong spanning from 2010 to 2021, exploring the nexus between their ecological footprint and financial performance through the lens of Bayes’ theorem. Employing multiple regression analysis techniques, we construct a conceptual framework elucidating the impact of green buildings. Our findings reveal a significant adverse effect of green buildings on financial metrics such as Return on Assets (ROA), Return on Equity (ROE), Funds from Operations (FFO), and Earnings Per Unit (EPU) of Hong Kong, China REITs in the short term. Particularly noteworthy is the pronounced negative impact on ROA and ROE, with FFO and EPU exhibiting moderate effects. These insights stand to guide REITs in formulating robust macro-incentive structures and micro-operational mechanisms, fostering both fiscal health and environmental stewardship.