• Tue. Jun 21st, 2022

Report: Climate Change Poses Risk to Offshore Real Estate Investments

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 coastlines is expected to cost cities up to 1 trillion dollars a year. by 2050.

“As climate risk assessment and reporting becomes mandatory and commonplace, the ability to understand and assess climate risk accurately and comprehensively will be critical and confer significant strategic advantage,” the report from The Climate Service states. and its partner Nuveen Real Estate.

One of the conclusions: the protection of green spaces in all urban municipalities can significantly reduce the risk of oppressive heat.

There is physical risk, find the authors of the report, or risks that directly impact assets and real estate markets. There are also transition risks, including changes in climate policy or 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, as the United Nations Framework Convention on Climate Change (UNFCCC) estimates that by 2070, $35 trillion in real estate assets could be threatened.

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

The authors outline the potential impact on rental markets and multifamily commercial real estate, saying that, based on previous research, climate-related gentrification could change the composition of many parts of the United States and the world.

The theory is that as climate-related changes, whether a change in sea level or an increase in severe storms or otherwise, continue or accelerate, these changes are likely to trigger a migration from low to higher regions, which researchers call climate-related gentrification.

A report by Harvard University’s Joint Center for Housing Studies estimated that nearly 11 million American renters, or one in four renter households, spent more than 50% of their income on housing in 2018.

Consideration of climate risk, as it relates to businesses, buildings and real estate assets, could change the way economic development work is conducted for municipalities and state governments, as well as the way businesses discuss their options, think about and plan their growth and expansion. along cities and coastal regions.

Business leaders are taking notice 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 $3.8 million in fundraising earlier this year.