Property Investment and Climate Change Adaptation in Australia

Research Paper
Morgan Ellis
November 16, 2015
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KEY FINDINGS
  • By mapping meteorological data of temperature zones against office portfolios of Australian REITs and REMDs, we found that as of November 2015 28% of their portfolios fall in zones where temperatures, and associated cooling costs, are relatively high and are likely to rise further as a result of climate change.
  • Similar building performance in terms of energy efficiency between cooler and hotter zones, suggests that the real estate market in Australia may not have fully internalized the consequences of rising temperatures on properties from higher cooling requirements.
  • With the exception of Investa Office Fund (IOF), which has green‐certified its entire portfolio in the hotter zones, all companies in the set have at most 35% of office properties certified to a green building standard in these areas where cooling costs are most likely to increase further due to climate change.1
  • We estimate that Abacus Property Group, Charter Hall Group and Cromwell Property Group have around 12%, 25% and 23% of their portfolio values, respectively, exposed to hotter zones with higher potential operational energy costs, but with lagging green building investments or lagging green leasing practices relative to industry peers.
Morgan Ellis
Morgan Ellis
Vice President, MSCI Research

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