• Thu. Dec 1st, 2022

Report: Climate change poses a risk for real estate investments beyond the coast


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DURHAM – Real estate investments are particularly exposed 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 storms along the coast is expected to cost cities as much as it does. $ 1,000 billion every year by 2050.

“As climate risk assessment and reporting becomes mandatory and routine, the ability to understand and assess climate risks accurately and comprehensively will be essential and will confer an important strategic advantage,” the report reads. The Climate Service and its partner Nuveen Real Estate.

One of the findings: the protection of green spaces in all urban communities considerably reduces the risk of overwhelming heat.

There is the physical risk, find the authors of the report, or the risks that directly impact real estate assets and markets. There are also transition risks, including changes in policy or climate perception that could affect investment decisions or the valuation of real estate assets.

Measuring climate risk is important for real estate investors, the authors note, because the United Nations Framework Convention on Climate Change (UNFCCC) estimates that by 2070, $ 35 trillion in real estate assets could be at risk.

Durham Climate Service adds two scientists and develops climate risk assessment platform

The authors describe the potential impact on rental markets and multi-family commercial real estate, claiming that, based on previous research, climate-related gentrification could change the makeup of many parts of the United States and the world.

The theory is this: As climate-related changes, be it changing sea level or increasing severe storms or otherwise, continue or accelerate, these changes are likely to trigger a migration from lower elevation regions to higher elevation regions, which researchers call climate-related gentrification.

A report Harvard University’s Joint Center for Housing Studies estimated 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, as it relates to businesses, buildings, and real estate assets, could change the way economic development work is done for municipalities and state governments, as well as the way businesses discuss their options, think about and plan for growth and expansion along cities and coastal regions.

Business leaders are taking note of climate risk, noted James McMahon, CEO of The Climate Service, in a recent interview with WRAL TechWire.

“From my perspective, the field is growing tremendously, both in terms of demand and supply,” McMahon said.

The company raised a fundraiser of $ 3.8 million earlier this year.

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