As the world grapples with the challenges of climate change and environmental sustainability, the construction industry has taken a closer look into how it can create real estate projects that are more sustainable. One such example is the increasing use of green metal as a building material due to its lower environmental impact compared to traditional materials. However, this shift also raises questions about the potential impact of green metal price volatility on green real estate development.
Green metal is an alternative to primary steel which is made from recycled steel and other scrap metals (Liu et al., 2022). Recycling these materials results in significant reductions in CO2 emissions compared with producing primary steel from iron ore (Sizirici et al., 2021). Furthermore, recycling significantly reduces energy requirements for production, resulting in further savings in terms of environmental impact. This makes green metal an increasingly attractive building material for those looking to reduce their carbon footprint.
However, fluctuations in green metal prices can have a major effect on the cost and availability of green metal for real estate developers. While low prices would encourage greater use of green metal as a building material, high prices could make it prohibitively expensive and force developers back to traditional materials. As such, understanding how price volatility affects green real estate development is critical for those attempting to build sustainable projects.
Fortunately, mitigating strategies can be put in place by developers which can help reduce the risk associated with price changes and make their projects more financially feasible. These could include hedging strategies such as long-term purchasing contracts or forward contracts which protect against future price increases (Fernandes et al., 2020). There are also new technologies such as blockchain-based platforms which enable users to access transparent pricing information on different sources of recycled metals (Shankar & Williams, 2020). By leveraging these tools, developers can better predict trends in pricing and adjust their strategy accordingly.
At the end of the day, leveraging green metal for construction is essential for creating environmentally sustainable real estate projects. While fluctuations in price could pose challenges when attempting to use green metals as a building material, there are ways to mitigate risk associated with price volatility that can make development more feasible. By employing hedging strategies or taking advantage of pricing transparency offered by new technologies like blockchain-based platforms, developers can improve their chances of succeeding when incorporating green metals into their construction plans.
Z-Co is a one-stop shop for real estate development, construction, and capital solutions.