Leading real estate consultants, such as CBRE are identifying big climate risks for clients and how they can protect their assets.
The problem with the political debate on climate is that it ignores the real physical risk and costs on the property assets, arguably one of the most important and connected to the nation’s economy. Anywhere.
At the heart of all that we do is a physical location. And the property industry is the way we manage the allocation of land and buildings. It’s often, if not usually, at the tail end of security for many financial transactions, loans in particular.
Now, at the top end of the investment and advisory community that manages those assets, alarm bells are ringing.
Leading commercial real estate agents and consultants who advise institutional owners, government and private investors alike are issuing analyses of risks to core assets and how clients and the finance and insurance communities can protect themselves.
A new report from CBRE launched in the wake of the latest COP in Brazil – sadly also known as Flop30 – has identified loss and damage from climate change in the Asia Pacific alone at US$780 billion ($1200 billion), potentially increasing to US$1.2-US$1.5 trillion ($1.86-$2.32 trillion).
It warned that properties at risk from climate may see declines in value, or so-called “brown discount” and those that are most resilient will rise in value, both from owners and tenants who were also increasingly aware of risk.
The impacts would also be felt from financiers and insurers responding to higher risk.
The company advises due diligence to include specific hazards “even within the same neighbourhood” as well as the resilience of the power grid in the area, water supply and drainage, and transportation routes, “to ensure continuity of operations during and after a climate extreme event”.
Building level resilience
Buildings can also benefit from an upgrade to the power supply, a renewable energy system, relocation of plant rooms to higher levels in case of floods, better drainage systems, permeable surfaces and landscaping to minimise soil erosion.
There’s even “hurricane windows” engineered to withstand extreme weather conditions that feature laminated glass “with an interlayer that holds the glass intact even if broken”, the company report said.
Commercial real estate landlords should have strategies in place to minimise the impact of climate-related hazards.
Investors, financial institutions, and other professionals are increasingly relying on climate risk data from companies such as Climate X to assess how well their properties may withstand specific threats, such as extreme heat, powerful winds, or flooding.
The report notes that occupiers will be particularly sensitive to risk so rents for more exposure properties are likely to suffer.
The company’s head of sustainability, Pacific, Su-Fern Tan said “Severe weather is not a distant threat—it’s here, and it’s reshaping how we think about real estate. Owners, developers, investors, and occupiers all have a role to play in managing physical climate risks and building resilience into operations.”
Head of research, Asia Pacific Ada Choi, said investors will likely prioritise properties with climate-resilient features because such assets could attract “stronger occupier demand, retain more value and outperform their less resilient counterparts.”
Other agencies are also turning to greater promotion of resilience strategies.
Cushman and Wakefield offers clients environmental and sustainability strategies and implementation, and it also publishes an annual sustainability report for its own operations.
This includes the claim in its 2024 report that it has provided sustainability services for
- 85,126 buildings
- Exceeded its target of a 50 per cent reduction in scope 1 and 2 market-based greenhouse gas emissions relative to a 2019 baseline, six years ahead of schedule
- Procured 87 per cent of electricity for the firm’s corporate offices from renewable sources
“By aligning our sustainability initiatives with our broader strategic priorities, we are building resilience, unlocking opportunities for growth, and setting a new benchmark for performance and responsibility across the commercial real estate industry,” Nathaniel Robinson, chief investment and strategy officer at Cushman & Wakefield, said.
JLL also weighs in on sustainability with reports such as its investor survey from the UK that said 94 per cent of respondents in the UK are “actively implementing or considering climate risk mitigation and adaptation within their portfolios”.
It also said climate risk will affect future demand for buildings through its Future of Work survey last year that showed 45 per cent of corporate real estate leaders will “only select buildings that are resilient to climate events”.