Climate risk in private real estate portfolios: What’s the exposure?

MSCI has released its  Climate risk in private real estate portfolios: What’s the exposure? report.

The report examines the impact climate-related events, such as water stress, hurricanes and flooding, may have on real estate. It analyzed five real estate markets in different regions (Australia, South Africa, the United States, England and the Netherlands) on the most relevant physical risk in each location. Conducting this analysis at a portfolio level, asset by asset, MSCI could see which properties were exposed and how those exposures compared to their investing peer groups.

Highlights:

• Precise location matters and so does the presence or absence of local measures that mitigate climate risk.
• For example, very few assets in London were at risk to flooding thanks to the Thames Barrier, one of the world’s largest flood-defense systems. Similar lines of defense in the Netherlands safeguarded over 97 percent of the most at-risk assets measured.
• In contrast, 81 percent of measured assets in Australia and 70 percent in South Africa were in areas suffering chronic water stress.
• When seeking to understand physical risks, MSCI found that a detailed understanding of exposure is the first step investors may undertake.

To read the full report, click here.