DURHAM – Real estate investments are particularly vulnerable to climate risk, according to a new report co-authored by The Climate Service, as the impact of climate-related damage from rising seas and coastal storms is expected to cost cities up to $ 1 trillion each year by the year 2050.
"As climate risk assessment and reporting becomes mandatory and common practice, the ability to accurately and comprehensively understand and assess climate risks will be vital and provide a significant strategic advantage," the report by The Climate Service and Partners said Nuveen Real Estate.
One of the results: protecting green spaces in urban communities can significantly reduce the risk of extreme heat.
There are physical risks, see the authors of the report, or the risks that directly affect property assets and markets. There are also transition risks, particularly shifts in politics or perceptions of the climate, which could affect investment decisions or valuations of real estate assets.
Measuring climate-related risk is important for real estate investors, the authors note, as the United Nations Framework Convention on Climate Change (UNFCCC) estimates that $ 35 trillion in real estate assets could be at risk by 2070.
The Durham Climate Service adds two scientists and is developing a climate risk assessment platform
Describing the potential impact on rental markets and commercial apartment buildings, the authors believe that based on previous research, climate-induced gentrification can transform the makeup of many regions in the United States and around the world.
The theory is that as climate-related changes, whether from changing sea levels or intensified severe storms or otherwise, continue or accelerate, these changes are likely to trigger migration within lower-lying regions to higher-lying regions that the researchers considered. describe climate-induced gentrification.
A report by the Joint Center for Housing Studies at Harvard University estimates that nearly 11 million U.S. renters, or one in four tenant households, spent more than 50% of their income on housing in 2018.
Addressing climate risk in relation to businesses, buildings and real estate assets could transform the way business development is conducted for local and state governments, as well as the way businesses approach their options and think and plan growth and expansion along coastal cities and towns regions.
Business leaders are taking note of climate risk, noted James McMahon, CEO of The Climate Service, in a recent interview with WRAL TechWire.
"In my view, the field is growing tremendously in terms of both demand and supply," said McMahon.
The company raised a $ 3.8 million fundraising round earlier this year.
source https://seapointrealtors.com/2021/07/26/report-climate-change-poses-risk-to-real-estate-investments-beyond-the-coasts/
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