Market Insight: Resilient Buildings – Will It Sell?

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Executive Summary

As the commercial real estate sector bears the brunt of increasing losses from extreme weather events, the issues of climate resiliency and adaptation are being thrust into the minds of stakeholders. Investors, insurers, lenders and valuers are still getting to grips with what a new climate reality would mean for the sector; specifically, how physical climate risks and the resiliency of buildings to those risks will impact financial performance. Stakeholders from across the real estate sector can use this report to understand how climate risk is impacting real estate valuations and insurance practices, and how these might change in the short and long term. 

Summary for decision-makers
The face of the real estate market is changing due to the threat of climate risks

Real estate industry stakeholders are attempting to reconcile the financial risks of climate change
Investors are feeling the initial sting of climate risk impacts, but it is early days
Insurers recoil from losses to leave asset owners retaining greater risk at higher costs
The real estate sector’s failure to engage fully with climate risk will slow adaptation and hurt resiliency
In the long run, high adaptation is the only sustainable scenario
Figure 1. Linking climate risk to fund management strategies is the major issue for real estate firms
Figure 2. Climate-related losses for real estate firms over the next three years
Figure 3. Impacts of acute and chronic physical risks on different aspects of real estate financial performance
Figure 4. Alternative insurance options available to real estate owners
Figure 5. Physical climate risks and resiliency and adaptation measures in real estate

About the Authors

Ben Readman

Ben Readman

Industry Analyst

Ben is an Industry Analyst covering the real estate sector, with a focus on data centres and hotels. His core research covers more than 100 vendors in the energy efficiency, s...

Claire Stephens

Claire Stephens

Research Director

Claire Stephens is a Research Director at Verdantix, leading research into technologies and services shaping the real estate and the built environment, encompassing ...

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