Current expectations suggest the Paris Accord target of limiting global warming to 1.5 degrees by 2050 might no longer be achievable when considering all industries and countries, according to AEW’s new climate-related transition risk report focused on the European real estate sector. Based on 196 European market segments across 20 countries and five sectors, the report examines the impact of expected costs associated with energy transition on projected prime real estate returns.
The report indicates an average 37 percent rise in the European transition risk premium to 26 basis points for 2025-2029 annual projected returns, up from 19 basis points across 196 European markets. This reflects the report’s expanded data set and new methodology. Notably, transition risk remains modest compared to overall anticipated total returns of 8.1 percent, suggesting that in European real estate, the Paris accord targets remain relevant. AEW’s latest calculation incorporates increased
