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Mainland property developer Vanke is one of the big investors in a proptech fund launched by the Los Angeles, California-based Fifth Wall Ventures. Photo: LightRocket via Getty Images

US venture firm Fifth Wall’s US$500 million green fund eyes start-ups with sustainable solutions for real estate sector

  • The Los Angeles-based venture capital manager is launching a new fund to help developers cut greenhouse gas emissions
  • Its last proptech fund drew investments from China Vanke, Sino Group and Keppel Corp

Fifth Wall Ventures, which focuses on property technology, is looking to raise around US$500 million (HK$3.9 billion) for its first carbon impact fund to invest in start-ups working on clean tech solutions to help the sector reduce its carbon footprint.

Co-founder and managing partner Brendan Wallace said over the past one year he has seen a marked shift in Asian property developers and landlords adopting new technology that could reduce carbon emissions. The sector accounts for a third of the world’s greenhouse gas emissions and consumes about 40 per cent of the world’s energy, according to United Nations Environment Programme.

“In Asia, a lot of the large, family-held real estate companies are going through succession as their founders pass the business onto the next generation,” said Wallace, who was in Singapore last week to meet potential investors. “This younger generation has heard a lot about carbon neutrality and thus holds a more altruistic view about building more sustainable, environmental friendly cities.”

Brendan Wallace, co-founder and managing partner of US proptech fund manager Fifth Wall. Photo: Handout

The Los Angeles, California-based Fifth Wall last year closed a US$503 million proptech fund, which attracted investments from various countries including mainland developer China Vanke, Hong Kong-based Sino Group, Keppel Corp from Singapore and the city state’s investment firm Temasek.

Sino Group and Temasek did not respond to inquiries from the Post, while China Vanke was not immediately available for comment.

Property technology has the potential to create a multibillion dollar market as China looks for new growth engines

The new carbon impact fund, which will add to Fifth Wall’s current US$1.1 billion assets under management, has been launched in response to some of its existing investors’ demand, Wallace said. It aims to close the fund “over the next few months”.

The carbon impact fund will invest in start-ups that offer solutions that could reduce carbon emissions by landlords or developers during construction or day to day operations of the buildings.

The solutions could range from hardware or software that reduce a building’s energy consumption, solar and geothermal power related technologies and internet of things.

How high-density, high-rise Hong Kong uses green buildings to help fight climate change

The new fund could also invest in makers of building materials, such as concrete that consumes less energy to produce or “smart glass” that automatically dims and brightens to suit outdoor light conditions.

“There are economic imperatives to construct and operate buildings with less energy. Given that energy is one major cost for real estate owners, buildings that consumer less energy are also more profitable for their owners,” said Wallace.

Globally, many countries in Europe and several states in the US, such as New York and California, have already enacted laws mandating them to achieve net zero carbon emissions latest by 2050.

Last June, the Environment Bureau in Hong Kong launched a three-month consultation that sought views for drafting a strategy to fulfil the city’s obligations under the Paris Agreement, which aims to keep the global average temperature increase this century to within 2 degrees Celsius.

The bureau said that achieving an 80 per cent carbon reduction means enforcing mandatory low-carbon building design and green procurement for the city.

Regulatory compliance aside, capital market investors globally are increasingly putting sustainable and environment, social and corporate governance goals as part of their requirements on their investee companies, given the increasing reputational risks and economic losses associated with businesses that have an adverse impact on climate change.
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