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Smart buildings fuel China’s carbon compliance
Government, innovation, demand driving billion dollar growth, Hong Kong ambitions
Yuki Li 31 Aug 2023

China is making great strides towards delivering on its pledge to achieving its carbon peak by 2030 and reaching carbon neutrality by 2060 via the development of energy-efficient smart buildings that serve to counter the real estate sector’s high carbon emissions and energy consumption.

“Smart buildings reduce energy and maintenance costs as well as equipment downtime, and increase tenant wellness and satisfaction, automation, indoor air quality and optimization of asset management,” says Benson Tam, founder and CEO of Venturous Group, which focuses on smart city tech and investments in China.

The operations of buildings account for 30% of global final energy consumption and 26% of global energy-related emissions (8% being direct emissions in buildings and 18% indirect emissions from the production of electricity and heat used in buildings), according to the International Energy Agency, highlighting the need for sustainable solutions for buildings.

The Asia-Pacific region, in particular, has witnessed significant growth in the value of the smart building market, reaching around US$21 billion in 2021; and this market will continue to expand, reaching an estimated value of US$91.7 billion by 2031 and exhibiting a commendable compound annual growth rate of 16.1% from 2022 to 2031.

China, in particular, has set ambitious targets to spur the development of smart buildings within the country. The three key factors driving the growth of smart buildings in China, as outlined in a China Academy of Building Research report, are government policies, technological innovation and market demand. Smart buildings leverage advanced technologies, such as internet of things (IoT), artificial intelligence (AI) and big data analytics, to optimize performance, minimize energy usage and improve occupant comfort.

The huge market demand has driven the quick development of companies providing smart building solutions. For example, Venturous, which has smart buildings as one of its three focus sectors, just closed its series B funding earlier this year raising US$21 million.

“Because we are still a relatively small company compared with our competitors, we tend to focus on second- and third-tier cities in mainland China,” Tam shares. “Firstly, these cities are smaller. And secondly, they are lagging behind, and therefore, are more desperate to successfully become a top smart city, as is the case with Hangzhou. Even for cities like Wuxi, [smart city technology] offers them new opportunities with the potential to surpass first-tier cities.”

Venturous’ portfolio firm Tianjin Anjie IoT Science and Technology (Anjie), which is a smart energy artificial-intelligence-of-things (AIoT) technology solutions company based in Tianjin, is a major supplier of energy management solutions to buildings in China using AIoT, big data and cloud infrastructure.

Notably, Anjie helps its real estate clients save up to 15% to 30% of their energy-related costs, which currently represents a reduction of 2.2 million tonnes of carbon dioxide emissions per year.

Hong Kong ambitions

Outside of the mainland, Hong Kong has ambitions of becoming a smart city; and with this in mind, it has made significant progress in redeveloping more buildings towards becoming smart ones. And, in the process, it has risen in the International Institute for Management Development Smart City Index rankings from 38th place in 2019 to 19th in 2023.

Neuron Digital Group, a Hong Kong-headquartered joint venture of Arup and Venturous, aims to make buildings smarter by leveraging the power of data and technology to decarbonize building assets and facilitate the transformation towards digital property management.

The company has installed its digital technology in more than 100 buildings in Hong Kong. Prime among them, and the first to use Neuron’s tech solutions, is One Taikoo Place, a brand-new triple Grade A 48-storey office tower developed by Swire Properties, making it the city's first AI-enabled smart building.

When developing a smart building, “there is a slight tension between the buyer and the developer,” notes Thomas Pang, acting CEO at Neuron Digital Group. “Developers are now focused on doing the minimum required to deliver a building to the buyer, while the buyer desires the best and most advanced building possible.”

Individuals exhibit different behaviours and preferences, Pang adds, and their reactions are influenced by changes made by suppliers, shops and owners – a complexity that requires a comprehensive approach to achieve the best results in such situations.

The most effective method is to use data and implement a system that continuously collects information, he explains, with the biggest challenges lying in gathering data from various suppliers and building systems, which necessitates effective communication with a large number of individuals.

Two Taikoo Place, the latest addition to Swire Properties’ HK$15 billion (US$1.9 billion) Taikoo Place Redevelopment Project, Pang shares, will adopt the Neuron solution, eventually making it a smart building.

New buildings are easier to equip with smart control systems and transform into smart buildings. However, Neuron is also retrofitting older buildings due to the high demand in that sector.

Additionally, Pang states, the firm plans to expand into the Southeast Asia market, starting with Singapore.

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