Climate change changes everything - especially for the real estate sector

In the real estate industry, climate change and the associated increase in extreme weather events have added an additional risk of critical importance that you need to keep a close eye on. Exceptionally high levels of precipitation, flooding, hurricanes, wildfires and chronic risks such as heatwaves or rising sea levels are causing more frequent and higher damage to buildings in risk areas, which can lead to unplanned write-downs or losses due to premature sales.

With Location Risk Intelligence and its editions, you are a decisive step ahead. Significantly improve your risk management by determining and visualising the risk exposure of individual assets or entire portfolios up to the year 2100 based on current and expected future climate risks and documenting them in meaningful reports.

As a result, you can build valuable climate risk expertise which you can use in current and future decision-making to ensure that your investments are secure and successful in an era of climate change.

What makes one asset different from another? In addition to many traditional factors, resilience to climate risks is becoming increasingly important.

There is a growing number of properties, be they homes, apartments or commercial buildings, that are becoming uninsurable, unsaleable and ultimately unusable because of their location. What until recently was considered a good investment can quickly become a total loss.

Location Risk Intelligence supports you in assessing the resilience of properties to climate risks with a wide range of predictive models based on sound data and easy-to-understand visualisations. This is because changes in our climate are increasingly leading to basic requirements such as the availability of water and energy at affordable costs, or a functioning infrastructure with traffic and transport routes, service providers, schools etc. no longer being guaranteed in the future.

And conversely, you can identify regions for future investment that will become desirable for companies and people if they have to move away from areas that will no longer be attractive and worth living in due to the effects of climate change.

Climate change offers opportunities for those who know how to use their climate risk expertise to take advantage of them.

You can either sell previously high-yielding commercial properties that are at risk of losing their attractiveness and value due to increasing climate risks while you can still achieve a good price for them, or take targeted measures to make them more resilient to natural disasters or chronic risks.

Location Risk Intelligence supports you with a wide range of climate scenarios. Of particular interest in this context is the 'undefended' vs. 'defended' scenario, which allows you to estimate the scope of the measures required and make a data-based decision. 

You can also use this knowledge to acquire financially attractive assets that you can significantly enhance through appropriate protective measures.

Climate-compliant construction does not mean the same thing everywhere. After all, the requirements for a building depend very much on its location and how the climate there will develop in the future.

Location Risk Intelligence is the ideal tool here to run through various scenarios before the planning stage. With the knowledge gained, the construction and materials of a building can be defined in such a way that it will continue to function in the future despite changing conditions, and remain an attractive place that is designed from the outset to meet the changing expectations of its users. A very similar approach can also be applied to existing properties to make them fit for the future and therefore attractive as a long-term investment.

Here you benefit in particular from 9 climate change risk scores and 35 climate change variables to evaluate a property or a specific location in great detail. To name just a few, you can determine future changes in the average temperature as well as the number of days expected to exceed 35°C, or the amount of precipitation predicted: parameters that are crucial when planning a building project. 

The global shift from voluntary to mandatory reporting and your customers' increasing demand for more transparency are putting pressure on you to disclose how your assets are affected by climate risks and what measures you are taking to minimise these impacts.

At first glance, this may seem like an additional burden for you, but on closer inspection there are real benefits and opportunities for you and your company. Provided you have the right tools in place, such as Location Risk Intelligence, you can make reliable, data-driven predictions about the value of your investments, taking into account the expected impact of climate change well into the future. 

On the one hand you can review your existing portfolio and identify assets which could be impacted. You can then take steps such as installing defences which will make them more resilient to climate risks and may not only maintain but even increase their value, or alternatively dispose of them while you can still do so at a reasonable price. On the other hand, you can examine future investments in detail in advance and evaluate them on the basis of scientific data to minimise your risks as far as possible.

This puts you in the comfortable position of being able to offer verifiably future-proof investment opportunities and gives you an invaluable competitive advantage.