The cool alternative to air conditioning
13 / 08 / 25 - 5 minute read
In our homes and in our workplaces over the summer months, we face a battle: to stay cool. In hotter regions of the world, this problem is exacerbated. We turn to our traditional air conditioning systems and portable devices, such as fans, to find relief from the heat. And business owners examine the most cost-effective ways to stop their employees melting in their buildings.
Jane Baseby, PATRIZIA Associate Director - Sustainability Infrastructure
The CaaS solution
So, what if you were told that there was a business model innovation which could deliver better conditions to your occupants, bring your costs down and reduce your carbon emissions?
This is the premise of cooling as a service (CaaS), which allows building owners and managers access to cooling in coordination with the consumption habits of occupiers.
CaaS relies on data to optimise the supply of cooling, using historic patterns and predicative power to minimise energy waste and carbon intensity in commercial and industrial real estate.
CaaS promises its customers optimal temperatures for a lower cost and carbon footprint and without an upfront capital cost. In return, the CaaS provider who owns the cooling infrastructure is compensated with a long-term inflation linked revenue stream that comes with a built-in incentive to increase returns by delivering the service efficiently.
Patrick Lee, PATRIZIA Operating Partner Infrastructure
The business model
The business model sees the owner of cooling infrastructure sell the cool air generated by industrial scale chillers and air handlers to an end customer, who works in or operates within the same building.
The cooling infrastructure tends to be onsite to where it supplies, differentiating it from a district cooling network that owns a distribution network spanning a larger geographical area.
The equipment itself resembles traditional infrastructure, complete with compressors, valves, pipes, pumps and gauges, helping it to slot in neatly to the basements of our built environment, explicitly demonstrating the combination of real estate and infrastructure – known by PATRIZIA as RE-Infra.
CaaS’s critical selling point is that it helps customers decarbonise their operations by outsourcing the complexity of low-carbon cooling to experts. It leverages energy-efficient technology to reduce emissions and lower costs - without customers needing to invest, manage, or maintain a cooling system. It also has the extra benefit of using data from across the portfolio to train AI algorithms, which operate each system more intelligently and efficiently..
In addition, regular maintenance and upgrades mean CaaS cooling systems avoid the energy waste of a poorly maintained system, and operators tend to use environmentally friendly refrigerants that reduce greenhouse gas emissions and improve overall energy efficiency.
All in all, CaaS provides the same cooling needed with a lower energy consumption, making it cheaper for customers.
A growing market
To establish where CaaS sits as a market, it has to be taken into account with heating as a service (HaaS) as data refers to the two holistically. CaaS represents over half of the figures supplied whereby the cooling and heating as a service market has an estimated value of USD 85.1 billion in 2025, with projections to reach USD 176.5 billion by 2032.
Asia-Pacific leads the way
Source: Kaer Pte. Limited, Singapore-based CaaS provider
Perhaps unsurprisingly, given the climate in the region, Asia-Pacific (APAC) leads the way with an estimated share of 34.5% of the USD 85.1 billion global cooling and heating as a service market. North America comes next on 21.5%.
At an individual country level, growth prospects are strong in the US, Germany, China, India and Brazil.
APAC’s dominance is even less surprising when you consider that the CaaS asset class originated in the region.
Demographic tailwinds
Bolstering the attractiveness of CaaS in APAC is the growth of middle-class consumers in the region. Oxford Economics posits that two in every three middle-class consumers will be in APAC in 2029, with China and India adding a further 110 million households to their middle classes.
With deeper pockets, an evergreen need to cool its built environment and governmental decarbonisation ambitions, the popularity of CaaS in APAC is only set to grow.
And as the data centre asset class becomes ever larger, with cooling critical for their myriad of servers, drives and network equipment, the case for CaaS only strengthens.
PATRIZIA’s CaaS investment
With such momentum behind the asset class, especially in APAC, PATRIZIA, together with Mitsui & Co., Ltd. (Mitsui), made a strategic investment in Kaer in April.
The investment commitment, made via the APAC Sustainable Infrastructure Fund (A-SIF), of up to USD 350 million will support the expansion of Kaer’s CaaS business across Asia, specifically expanding its existing presence in Singapore, Malaysia, India and Indonesia, as well as seed growth in new regional markets including Thailand and Vietnam (the latter being the emerging market with the fastest middle-class growth over the next five years, according to Oxford Economics).
The opportunity to invest in Kaer perfectly aligned with PATRIZIA’s mid-market infrastructure focus, whereby PATRIZIA targets businesses led by inspiring entrepreneurs and provides the capital to scale their operations. Often using active asset management to steer the growth of these businesses, in Kaer’s case, the investment will be used for the firm’s further expansion and business development, with A-SIF initially holding a minority stake.
Short- and medium-term growth is forecast, building on Kaer’s 30% growth in 2024. A further 50% growth is projected from existing contracts coming online this year and, by 2028, the company aims to deliver low-carbon cooling to up to 100 million square feet of commercial real estate, helping to eliminate approximately 120 million kilograms of carbon emissions from cities in Asia.
Saji Anantakrishnan, PATRIZIA Head of Infrastructure – Australia and Asia
Explaining the attractiveness of the investment, PATRIZIA Head of Infrastructure – Australia and Asia Saji Anantakrishnan commented: “Kaer has built a market-leading business in an emerging sector that delivers both sustainability benefits and cost savings to customers.
“This platform exemplifies the merits and value-creation potential of mid-market infrastructure investing at its best.
“It is also a great example of what RE-Infra means in practice - infrastructure investing that enhances the value of the built environment, with technology playing a critical role in linking the two.”
Keeping the urban population in Asia cool, bringing sizeable decarbonisation gains and delivering cheaper, on-demand services for landlords and tenants, while securing a return on investment for investors, CaaS is on an upward trajectory.
This article is taken from the digital version of our thought leadership magazine, estatements. Take a look at the magazine here:
WELCOME - estatements magazine Edition 2, 2025
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