It will take an average annual capex figure of €8 per square metre, at a current climate-related risk premium of 19 basis points, to ensure prime assets keep in line with the current 2050 sustainability deadline set by the Paris Agreement.

Using the new 2.03 Carbon Risk Real Estate Monitor (CRREM) pathways, AEW has now combined both transition risk and physical climate risk to make the climate-related calculation, which covers 196 European markets. Transition risk is measured according to anticipated regulatory requirements that need to be addressed to prevent an asset from becoming stranded, such as energy use and greenhouse gas reductions. Physical climate-related risk focuses on the damage and disruption to buildings as a result of river flooding and sea level rises.

The new climate-related risk premium is made up of three elements: transition risk (at 15 basis points), river flood risk (at 4 basis points) and sea level rise danger (at 0.4 basis points). For non-p