Does the real estate sector understate physical climate risk?
Does the real estate sector understate physical climate risk?
Investors need to carefully consider physical climate risk, as assessments of properties may understate climate risks. They need to ask are the current models they use for climate risk evaluation up to date? We might think we are fully aware of the physical risks, but are we? Niu Dongxiao, Postdoctoral Researcher at Maastricht University School of Business and Economics, digs into these questions.
The extended lifespan of properties make them extra vulnerable
The rate of sea level rise is accelerating globally, and the frequency of natural disasters has increased fast over the past decade. Hurricane Ian, which slammed into Florida in September 2022, has caused more than 140 deaths and thousands of homes destroyed, resulting in $100 billion in losses. Residential and commercial real estate typically has a 50 to 80-year lifespan and thus is vulnerable to the long-term effect of natural disasters. Physical risks are taking a toll on properties’ stakeholders in different ways. Quality information and physical risk assessment at location and property level are therefore crucial inputs for investors to conduct investment risk analysis to protect properties.
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https://green-engagement.org/does-the-real-estate-sector-understate-physical-climate-risk/?utm_source=linkedin&utm_medium=social&utm_campaign=green
