Proptech has hit the mainstream, with $1.5bn capital raised by around 20 specialist funds worldwide, according to PERE, out of a total equity target of $2.5bn. While many funds and proptech start-ups are US-based, Australia’s Taronga Ventures has raised capital from investors including PGIM Real Estate, Dexus and Grosvenor Group. Asian developers such as Singapore’s CapitaLand and Hong Kong’s Swire Properties have also become involved in the sector.

For all these companies, technology which contributes to sustainable buildings is an important part of the rationale for proptech investment. Chris Marriott, chief executive, Southeast Asia at Savills, says: “Everybody is looking at ways to reduce the environmental impact of the buildings they operate or manage, given that their operations are responsible for a substantial proportion of global emissions.”

The International Energy Agency estimates the buildings and construction sector accounts for 36% of global energy use and 39% of energy and process-related carbon dioxide, 11% of which resulted from manufacturing building materials and products such as steel, cement and glass and the rest from building operations.

“Energy consumption makes up a significant portion of the operating cost in this region,” says Marriot, “so measures to help such consumption will improve both the environment and help the bottom line. A good example would be air conditioning, which makes up around two-thirds of power use for buildings in Southeast Asia.”

Pressure to make buildings greener comes from a number of sources. Institutional investors in real estate are increasingly unwilling to back developers or managers which do not take account of sustainability, corporate occupiers and their staff are less willing to occupy inefficient and unhealthy buildings and governments all over the world are increasing the weight of green regulations.

There is a range of technologies – from solar panels to intelligent light switches – being used and adapted to help real estate become more sustainable and resilient, however Marriott highlights measurement of building performance as the cornerstone of a sustainability strategy.

“The key starting point to improving real estate’s environmental performance is to measure it, which is why building management systems are the first step for green proptech, followed by systems which reduce energy and water use once you know how much an asset is using and where.”

Measuring building performance can harness the Internet of Things – wireless connected devices which provide real time performance data – with artificial intelligence and big data to process the results for buildings or entire portfolios. However, Marriott notes: “A major challenge is ensuring that a building’s or a portfolio’s systems and technologies can all communicate.”

Australia has been one of the key centres for green proptech innovation in the Asia Pacific region, not surprising as it also scores highly in sustainability rankings such as GRESB. Companies such as EP&T Global, which builds systems to lower energy and water use and Switch Automation, which creates smart building platforms, are working to help landlords lower costs and meet sustainability targets.

Asia Pacific is moving in the right direction, yet the real estate industry has only scratched the surface of what can be done to improve sustainability through technology and a number of significant challenges remain. For example, Marriott says: “Older buildings make up the bulk of stock in every market; what can we do to retrofit sustainability to them?”

Further reading:
Savills Asia Pacific Investment Quarterly

Contact us:
Chris Marriott