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Sustainable Real Estate Development and Impact Investing

Qixuan Wang

August, 2020

The world of the 21st century is different from that of a century ago. Population growth, industrial and educational development, intercontinental travel, and technology present the planet with greater possibilities than ever, but also greater challenges. While it is well known that bursts in technology have led to the possibility of the planet supporting billions more people than was thought possible even fifty years ago, it is also commonly understood that the combination of more people, energy consumption, trash production, and carbon emissions have created an environment where if changes are not made, the planet may well be doomed. Even if climate change is controlled, pollution and overcrowding can threaten the physical and mental health of every living creature, human and animal alike. Moreover, resources are finite. In light of these challenges, 21st century life practices must become more sustainable if life and the planet are to survive. It is small wonder then, that in September 2015, the General Assembly of the United Nations confronted issues of sustainability by enacting the 2030 Agenda for Sustainable Development, with sustainability defined broadly (United Nations, 2015). The agenda contains seventeen global goals with 169 specific targets designed to create a sustainable world. The preamble to all the work needed to reach these goals is the Universal Declaration of Human Rights: “We reaffirm the importance of the Universal Declaration of Human Rights, as well as other international instruments relating to human rights and international law” (United Nations, 2015, n.p.) 

Housing is a specific part of the agenda, as noted in Goal 11, which is, “Make cities and human settlements inclusive, safe, resilient and sustainable” (United Nations, 2015, n.p.). The targeted items for action that are part of the measurement for achievement of this goal areensuring sustainable housing, transportation networks, protection of natural resources, access to open green areas and parks, and the construction of edifices in less developed areas using native materials (“Sustainable Goals,” 2020). Presumably, that means that in a stony area, homes would be seen as sustainable if they were built of stone, and in forested area, wood would be a more preferable basic building material. 

To be sure, real estate is not one of the major areas within the agenda, which is all-encompassing. But if real estate development is not a major focus for sustainability, it is arguable – and this paper makes that argument – it will be palpably harder for any of the other goals to be met. For example, health care and public health are important and laudable sustainable goals for 2030. It is axiomatic, though, that the ways and designs in which people live affect their physical health. One need only look at the well-known and unenviable record of life in slum neighborhoods worldwide, where housing is constructed without attention to sustainability,causing serious problems with light, air, sewage, and repairs and retrofitting. In an earthquake-prone area, failure to take sustainability into account can result in rubble instead of structures that can absorb the shock of a temblor. In a location like Australia, which is parched for water in the best of times, sustainable construction means buildings with good rooftop water collection systems and underground cisterns that would be superfluous in the rainy Falkland Islands but are crucial there. In an age of pandemics, sustainability also means developers taking air exchange rates into account, so that those inside a building have less likelihood of inhaling a pathogen.


Real estate developers cannot build housing, office buildings, commercial spaces, and new communities the way they did fifty or a hundred years ago, or even twenty years ago. Sustainability is an issue that should be at the forefront of every new construction or renovation. There are developers and locations in the world that are showing the way to a new, more sustainable development future. One of the best ways to make that happen is through impact investing. Impact investing is a specifically targeted type of investing where the investor is seeking to create wealth in a special way. “Impact investing is a distinct strategy with a dual mandate to generate measurable positive social change and market-rate financial returns” (“U.S. Real Estate Impact Investing,” 2019). 

The author of this paper has personal experience with impact investing at least on a small scale, having studied with the professor herein and participating in the work of a project at Columbia University. The author has also helped to identify impact investing opportunities in China for a compendium on the subject, and has a particular interest in impact investing for real estate. While most of the case studies produced for the Case Collection of the School of International and Public Affairs [SIPA] (2019) tend to be in the areas of economic development, food security, and the energy sector, there is every reason for impact investing to extend to construction, development, and rehabilitation.

For impact investing in real estate, the investor identifies both financial goals and social change objectives, seeks investments in real estate that can meet these goals, and then makes the investment, always measuring the impact investment against both goals, instead of one or the other (“U.S. Real Estate Impact Investing,” 2019). While having a dual set of objectives can be challenging and may narrow the range of possible investment targets, investors with a social conscience will never find a better theory or paradigm in which to make both a fair rate of return and a social impact. 


                    The Application of Impact Investing to Real Estate Sustainability 

Impact investing is a “third way” to do investing (SIPA, 2019). The SIPA case study goes on to say that it may be superior because philanthropic efforts on behalf of particular causes tend to have a time limit associated with them, or the philanthropy may close or move on to other charitable interests (p. 3). This is part of what they call the “professionalization of charity” (p. 3). The profit motive, on the other hand, is a constant: people to do not lose interest in earning a profit. At the same time, people do not lose their need for places in which to manufacture, live, and work. This makes sustainable real estate investment a logical target for impact investing, as viable as the food supply or energy supply chains. How that investment takes place may take different forms. The SIPA case study points to the Acumen Global Venture Capital Fund and the Rockefeller Capital Management company as venues for the impact investor, and notes certain investments made by each company (2019). The United Nations Capital Development Fund is also a good example of this kind of firm (SIPA, 2019). Whether private, public, or as an arm of a non-governmental organization, real estate is a good industry in which to seek impact investing. The following sections explain why, with a focus on the emerging sustainable real estate development market in China. 

                Green Technology Benefits Conservation and Environmental Protection

​China has come very far from the environmentally unconscious spree of building that was accomplished during its rush to industrialize, as it has come to understand its role in the world as a leader in the movement toward sustainability. While a big driver has undoubted been the widely known 2007 national policy for “Green Credit,” which blocks banks for advancing capital to enterprises that have scoffed at environmental protection law, there are other reasons for this new interest in green technology in the real estate sector, an interest that makes impact investments highly attractive.     ​

​Another of the great inducements in China for real estate to be sustainable is energy cost (Xiao, 2015). Xiao explains that there are many possibilities for developers to take advantage of regional and national programs to create energy efficiency in new structures. For example, she cites solar power purchase agreements known as PPAs, which can fix prices for the users so long as solar panels are installed for a buyer who is guaranteed, namely the new owner of the structure. She quotes the co-founder of the investment organization Seeder to the effect that an investor can expect a return in excess of ten percent for investing in a building like that. Nor are solar panels the only possibilities and inducements. Xiao (2015) also declares that smart metering of building is a way to cut down on energy consumption. For the pure purpose of building, she writes about the construction of a Chinese villa where the entire structure was 3-D printed and pre-fabricated, thus reducing overall construction costs. Assembly time for the villa was under three hours, and the parts for the building were a combination of new and recycled materials, including construction waste (Xiao, 2015). If this technology grows, and construction waste can be put to use instead of being hauled to a landfill, the savings on supply chain issues will be considerable. 

​Noting that many countries around the world, including China, are committed to environmentalism and pushing forward green development, the leading real estate firm of Cushman and Wakefield has announced that it is bullish on the future of green development, and expects for it to be a part of the industry for many years to come  (“Greenlighting Green Investment,” 2018). Cushman and Wakefield go on to say that one area where green real estate development will become prevalent has to do with water use and recycling. For example, the company is looking for internal recycling systems to be made parts of buildings in the future, where there will be water cooling towers on the building’s roof, holding areas and cisterns for treated water sewage underground that recycles up to the cooling and purification towers, and then use of that recycled water for cooking, bathing, washing, and other typical water uses. While it is true that drinking recycled water is now largely limited because of the human disgust reflex, there is no reason that the technology could not advance to where all water can be purified again and again until it is potable, then dirtied, and then potable again. If large water recycling centers can filter out even human waste for the purpose of using the water for irrigation, smaller building-borne systems could do the same for homeowners, tenants, and business users. 

                          Affordable Housing Can Be a Focal Point for Impact Investment

​Housing is an important part of the sustainable development process and of impact investment planning. The American company Calvert Impact Capital in fact had its entrée point to impact investing through affordable housing (Godschalk, 2018). In fact, Godschalk relates that their company’s initial loan was to a developer in Oregon who was building affordable housing, and who is still involved with Calvert. Within a few years, Godschalk explains that the company had put upwards of $50 million US into more than two dozen developers and lenders who were seeking to develop affordable housing in the continental United States. What is particularly admirable about the effort is that the target for this housing is diverse communities, who are traditionally underserved in the general housing market. One of the problems that the author points out concerning affordable housing in the United States is that there is a fair amount of government support and guarantees for loans, but that does not mean that the market is fullyserved and everyone looking for an affordable place to buy or rent can find one. Especially in big cities like New York and Los Angeles, rent is well known to be the biggest percentage of many peoples’ incomes, rendering an improvement in their economic circumstances very difficult. In fact, Godschalk notes that about half of all renters are paying 30% of their income for their homes and apartments – dwelling they neither own nor derive tax benefits from, given their renter status. 

​Where Calvert operates, Godschalk (2018) explains, is to help developers in their earlier activities (the stage that comes before building), as well as to offer them financial assistance in ways that traditional lenders cannot. There are many costs associated with both traditional and affordable housing development – planning, design, site purchase, etc. – but which the developers may not have the funds to cover effectively and that is where Calvert comes in and makes a big difference (Godschalk, 2018). Projects that otherwise would remain dreams come to fruition. 

​One example of a development plan in China proper that would be ripe for impact investment is the one that was proposed for the city of Shanghai as part of its overall master plan, just four years ago (Yiyau, 2016). This plan was ambitious, noting that a massive territory would need to be developed and redeveloped, and that more than 3,000 square kilometers would be involved in the project, Yiyau goes on to write. The author also notes that one of the goals of the development will be to make maximum use of all the space, including the development of land underground, as well as to induce the construction of more parks and greenery that can combat global warming. Moreover, the plan is meant to be executed by 2040 (Yivau, 2016), meaning that the government agencies involved are taking a long view, knowing that everything cannot be built right away, and thus giving impact investors an opportunity to get in on the ground floor.  

                                                           A Report from the Field 

​During the time that I worked at both a firm in Hubei and at Worldview Global Impact, I had the opportunity to identify and research successful impact investment projects either contemplated, underway, or completed in China. In the third part of this report, the possibilities for impact investing in real estate are discussed. In this section, there is information about what is going on at this moment in the field. A number of these projects are in the arena of affordable housing. 

​One of the leading companies that I identified in China and Asia for sustainable real estate investment, and investigated thoroughly, is Asia Green Real Estate (“Our Properties,” 2020), with Chinese offices in Hong Kong, Chengdu, and Shanghai. The company has become a conduit for European investors to put money into Chinese development that is sustainable, with the degree of sustainability measured by a propriety “EcoTool” that quantifies and measures sustainability. There is a good video presentation and summary of the current projects of Asia Green that was presented at the 2020 Swiss Property Fair called IMMO 2020 (“News and Insights,” 2020). 

​Among the most important of the Asia Green Real Estate projects that I identified were two residential developments in Tongren, China known as Tongren IEC Phase A and Tongren IEC Phase B (“News and Insights,” 2020). What makes these residential properties unique, according to the company, is a mix of geography and development decisions taken. The projects are placed in a park-like setting with plenty of light and air, and are just a short distance away from the city’s airport. In addition, there is a high-speed train planned from very close to the projects in order to reduce the amount of carbon emissions that are generated by residents. Housing is clustered in energy-efficient high rises, allowing for there to be plenty of open space for residents to enjoy. Moreover, there is a wide mix of housing types, so that people do not feel as if there is just one option, but instead will find a combination of apartments, townhouses, and duplexes. Beyond housing, there is also a mixed-use component, plus proximity to a major hospital. It is important to note that Tongren is located in south-central China, away from the coastline, and thus property development like this can be an inducement for companies to locate closer to the regions from which migrant workers might come, which is sustainable in that it can promote family preservation. The project has a China Green Star certification.

​Another important Asia Green project that I identified, studied, and followed was the Yah Song Ju Phase III development in the city of Chengdu (“Our Properties,” 2020). Asia Green reports that the development has achieved both an EDGE rating of 62 percent energy savings compared to the average, and a China Green Star certification. The property development is sustainable in the way that it uses the latest in heating and cooling technology to manage its energy costs, and by creating a sustainable lifestyle for residents by locating near excellent public schools and health care facilities. Moreover, it is a short walk to a new subway station, so residents do not need to drive to work.

​In terms of affordable housing, while all sustainable development is more affordable in the long run because of diminished costs to the environment and in the cost needed for ordinary lifestyles, I identified the Swedish company White Creek as one that is devoted to bringing affordable housing in a sustainable way to the middle class and lower middle class (“White Peak,” 2020). Its focus is both on established Chinese cities and those that are emerging, and the company has invested in more than twenty different projects since it was established in 2007. A good example of one of these projects is the London Gardens development in the community of Linyi, a city of 10 million, but off the beaten path of urban areas well known in the west. The London Gardens project was priced, when I was researching it, at a level that could be affordable to the middle class, and was constructed in a way to take advantage of local supply chains and replicability of design motifs, without the soul-destroying monotony of so many similar developments. Another White Creek project of note is the Urban Blocks mixed-use development in the city of Linyi, where the company combined an assortment of incomes into housing bybuilding apartments of different sizes to meet the needs of tenants and owners of different incomes. However, the same principles of sustainability are built into all the units, no matter the wealth of the occupant. This mixed-income approach is surely one that developers can follow in the future, as a way to avoid the homogeneity of socioeconomic status that arises in too many neighborhoods. 


​Impact investing is a fairly recent development in the world of investing, taking a middle ground between the impact-focused efforts of philanthropies and charities, and the profit-focused efforts of traditional private investors and corporations. Impact investors seek a fair rate of return by investing in projects that will both bring that rate of return and produce a public good in various areas, such as food, transportation, environmental projection, and – increasingly – real estate development. To be sure, there may be differences in the ways that companies and investors define “public good,” but all impact investors have those dual goals.

​Real estate development itself has been slower than some other areas to be the focus of impact investing, most likely because of the complexities of real estate development and the way that it is capital intensive. A person may create, for example, a sustainable and biodegradable drinking straw in their garage or workspace, and then merely need to find an investor(s) who will help to bring that single, inexpensive product to market. For real estate, investors most take on large projects, which are often going to employ nascent technologies—e.g. for windows, heating, air conditioning, power, and area transportation-- in an effort to attract tenants and purchasers. However, in recent years, investors in the United States, China, and around the world are looking for sustainable real estate investment that can create a sustainable lifestyle according to the United Nations guidelines, reduce energy use and have a lower carbon footprint, and even bring together disparate elements of the socioeconomic continuum to live in a sustainable way.

​China has seen a number of these developments, in the arenas of mixed use and affordable housing. Different investment firms have become active, and are creating housing at all levels of development, including affordable housing. The most exciting thing about these developments is that they are also taking place outside the big cities of Beijing, Shanghai, and Guangzhou, and are proving to be viable in the marketplace. There is no reason that the future could not see a plethora of equally successful developments, given the right infusion of capital and support from official agencies and regulators. Together, a more sustainable and affordable residential future is possible. 



“Doing Well by Doing Good: An Introduction to Impact Investing. (2020). Columbia University.New York: Columbia University. 

Godschalk, C. (2018, Apr. 24). “Dear Impact Investors: Consider Affordable Housing” Retrieved from

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