AEW research examines impact of climate risk on European real estate investment
AEW has published its latest research report on climate risk. The report, authored by Hans Vrensen, head of research and strategy, explores how physical climate change, in particular river floods and rising sea levels, will affect European real estate returns, and the importance of a proactive investment approach.
The report looks at 196 market segments across Europe. Despite 75 percent of the 196 market segments being affected by river flood, the average annual expected loss from this river flood risk is a relatively modest 0.7 basis points per year of prime capital value from an insurance perspective.
At 1.4 basis points per year, French markets post double the European country average risk of river flood. Across sectors, residential’s expected loss from river flood risk is highest, albeit at a modest 1.1 basis points per year.
These extreme results for specific areas and even on a micro location and elevation level mean investors cannot ignore this risk and