Singapore’s Keppel Group has received an initial commitment of RMB1.6bn (€207m) from a global institutional investor to invest in a China-focused sustainable urban renewal programme.
Keppel will also invest RMB160m in its Sustainable Renewal Strategy (SUR), which is part of the group’s global push into the market for retrofitting older buildings. In late, 2022, the Keppel Sustainable Urban Renewal Fund (KSURF) was launched with Keppel aiming to grow KSURF to US$2bn.
The China fund is the first private fund under the SUR umbrella and could potentially have assets under management of approximately RMB3.9bn when fully leveraged and invested, Keppel said.
Keppel added that it has the option to upsize the vehicle to take in two other investors interested in the China fund.
Louis Lim, CEO, real estate of Keppel Corporation, said: “With China transitioning towards high-quality, low-carbon growth, Keppel is well-positioned to continue seizing opportunities (in the market).”
Lim added that Keppel was “pivoting from traditional residential property development and sale to focus on sectors which benefited from tailwinds and government support”.
He said SUR was a prime example, where Keppel was able to integrate people, processes, and technology to open new possibilities for the rejuvenation of older buildings.
The aim was to create greener, less costly and faster-to-market solutions compared to redevelopment, he added.
“We look forward to contributing our expertise to our private funds, where we will aim to drive energy costs down, improve tenant experience and uplift asset valuations by 10 to 15%.”
Christina Tan, CEO of fund management and CIO of Keppel Corporation, said the successful closing of the China-focused programme was expected to drive further investor interest and momentum for KSURF.
“As a global asset manager and operator with strong expertise in sustainability-related solutions, Keppel is well-placed to contribute to global sustainable development and decarbonisation efforts,” said Tan.
She spoke of Keppel’s “deep capabilities in sustainable urban renewal and established track record in Asia” which positioned the group well to create sustainable assets that could generate good investment returns.
The company said its SUR strategy was launched in response to growing international demand for more environmentally efficient urban renewal solutions in gateway cities.
Keppel is presently implementing its SUR capabilities in several projects in real estate markets, including Singapore, China, India, South Korea, Japan, and Australia.
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