How climate change can affect the real estate market
Posted: Tue Dec 10, 2024 4:24 am
Severe flooding across Europe causing damage in 10 different countries including Germany and the UK in 2021, increasingly common wildfires in Spain, Portugal and France, the worst flooding in over 100 years in northern Italy in 2023. These scenes are becoming more and more common across the planet, happening in the United States, Canada, Australia, Brazil and also in Europe.
But apart from the obvious tragedy for the population, these consequences of climate change also affect many different actors in the real estate market: buyers, owners, tenants, sellers, insurance companies, banks, real estate investors and, of course, real estate agents.
Find out what major changes you can expect and how to adapt your work to remain relevant in this scenario.
Climate change and the displacement of desirable places to live or shop
Sunny places with good weather chinese overseas asia database all year round, attracting foreign buyers from colder countries – every real estate agent can name a few of them. Unfortunately, these places can reach uncomfortable temperatures in the warmer months, suffer from water shortages or forest fires, for example.
Of course, these conditions could change property prices, either up or down, and this is already a reality. In the Insights Into Real Estate Investment Sustainability Survey (IRIS), conducted annually by climate risk firm Evora Global, almost half of real estate investors have seen extreme weather conditions impact their portfolios .
Falling property values, incomes and occupancy rates, as well as rising insurance costs (as occurred in Spain following the 2022 wildfires ), are some of the biggest reported effects of climate change on real estate portfolios.
Studies conducted in different areas of the US and cited in the report Climate Risk & Commercial Property Values , conducted by researchers from the Brookfield Centre in Real Estate & Infrastructure (Canada) and the University of Reading (UK), show the same pattern. They claim that areas affected by or close to wildfires experienced a drop in property prices of 5 to 13%.
The same is true in Europe: a European Central Bank report on weather risks says that property prices can fall by anywhere from 4% to a staggering 45%, depending on how exposed they are to flooding. This is explained by the fact that river flooding has historically been a major risk across the continent and is only likely to increase due to increased rainfall caused by global warming.
So, on the one hand, the properties your clients are considering buying could be at risk of losing value in the future due to global warming and its consequences. On the other hand, areas where governments are committed to preventing such changes from disrupting the population attract more attention from property investors and, in turn, become more valuable.
But apart from the obvious tragedy for the population, these consequences of climate change also affect many different actors in the real estate market: buyers, owners, tenants, sellers, insurance companies, banks, real estate investors and, of course, real estate agents.
Find out what major changes you can expect and how to adapt your work to remain relevant in this scenario.
Climate change and the displacement of desirable places to live or shop
Sunny places with good weather chinese overseas asia database all year round, attracting foreign buyers from colder countries – every real estate agent can name a few of them. Unfortunately, these places can reach uncomfortable temperatures in the warmer months, suffer from water shortages or forest fires, for example.
Of course, these conditions could change property prices, either up or down, and this is already a reality. In the Insights Into Real Estate Investment Sustainability Survey (IRIS), conducted annually by climate risk firm Evora Global, almost half of real estate investors have seen extreme weather conditions impact their portfolios .
Falling property values, incomes and occupancy rates, as well as rising insurance costs (as occurred in Spain following the 2022 wildfires ), are some of the biggest reported effects of climate change on real estate portfolios.
Studies conducted in different areas of the US and cited in the report Climate Risk & Commercial Property Values , conducted by researchers from the Brookfield Centre in Real Estate & Infrastructure (Canada) and the University of Reading (UK), show the same pattern. They claim that areas affected by or close to wildfires experienced a drop in property prices of 5 to 13%.
The same is true in Europe: a European Central Bank report on weather risks says that property prices can fall by anywhere from 4% to a staggering 45%, depending on how exposed they are to flooding. This is explained by the fact that river flooding has historically been a major risk across the continent and is only likely to increase due to increased rainfall caused by global warming.
So, on the one hand, the properties your clients are considering buying could be at risk of losing value in the future due to global warming and its consequences. On the other hand, areas where governments are committed to preventing such changes from disrupting the population attract more attention from property investors and, in turn, become more valuable.