Climate Change – How will it impact the Property and Real Estate Industry?

Climate change is the defining issue of our time, we look at what the property industry can do and the economic impact it will have. 


It is a known fact that the use of fossil fuels and greenhouses gases have caused carbon dioxide levels to rise which in turn have led to the increase of global temperatures, ocean warming and the shrinking of the Arctic sea ice. What does this have to do with the property industry?  A recent study by real estate services company Altus Group state that ‘property professionals view climate change as one of the leading concerns in the near future, above geopolitical risks’, it’s important to know the issues that could affect the property industry going forward.


Sustainability is no longer a choice. 

It is in a company’s interest to adopt a sustainable approach, especially in construction. Firstly you are future proofing against any risk to your building, 45% of total UK carbon emissions come from new buildings and 32% of landfill waste from the construction and demolition of buildings, there is a greater need for construction companies to look at how they deal with their waste.

It’s never been easier for construction companies to future proof their buildings. Such as Green Insulation which uses materials such as cotton denim as insulation which is recycled from industrial scrap. Other innovations in sustainable building materials involve biodegradable materials, which takes less time to decompose, in-turn reducing waste. Solar power is another major source of sustainability in construction, it not only saves money on energy bills in the long term but also absorbs heat, helping to warm a property during cold periods, without using electricity.


Fact- The Royal Institution of Charted Surveyors (RICS) estimated that by 2050, the built environment sector needs to cut its carbon footprint by 84 billion tonnes.


Sea-front property will become a hard sell in the long term.

Sea-front property is still an attractive prospect for real estate investors and buyers alike. However as the implications of climate change impact further, we will see more floods and more property in danger of rising seas, and we could see the demand for seafront real estate disappear.

The rising sea-front has already affected property around such places as America, where properties exposed to sea level rising are selling at a 7% discount to those with less exposure. This, however, doesn't mean sea-front property is unsellable, it just means there must be more care and planning in the construction phase of a building, so it can overcome potential floods.


Insurance Premiums will rise.

Due to the rising sea levels, increasingly harsh weather, forest fires and high levels of drought, there will be a greater need to fully insure properties. A report published by the environment agency explains, 'business and communities should plan now for climate change. However, this comes with its own problems as high-risk locations tend to bring a high insurance premium, this means that if more locations become high-risk, more property or real estate could become unsellable due to the high insurance premiums.

Research from Swiss insurance company Swiss Re claimed that there was $155bn of insured losses from natural catastrophes and man-made disasters last year, importantly there was over $337bn of economic losses that were not insured, meaning half of the damage was not covered by any sort of insurance.

As the saying goes ‘location, location, location’, this will have more meaning than ever when choosing to invest in a property or home thanks to the implications of climate change impacting how to sell a property in a location that is a high-risk or could potentially become one.