Climate risk in private real estate portfolios: What’s the exposure?
categories: Americas, Asia Pacific, Australia, EMEAI, MOLLOD Gillian, ROBSON Will, Investing (Investment Management), Responsible Investing, Risk Management, Asset Managers (Quant or Fundamental), Asset Owners, ESG Products & Services, Real Estate Products & Services, Real Estate
As a long-term asset class, private real estate is especially vulnerable to climate-related events, such as water stress, hurricanes and flooding. The impact for investors could range from increased operational costs (e.g., damage to the property, repair costs) to the potential for higher insurance costs, property devaluation and in some extreme cases, the complete loss of the property. We analyzed physical risks in five real estate markets in different regions (Australia, South Africa, the U.S., the U.K. and the Netherlands) to see which properties were exposed and to identify any concentrations of risk.