Climate change has become a "chestnut" among journalists. It's a recurring, predictable topic that regularly appears on the airwaves or in newspaper columns. The only difference is perhaps its frequency. Not a day goes by without a climatic episode - storm, heatwave, flood, drought... - making the headlines.
This climatic chaos is not without consequences for real estate players, starting with investors whose first job is to assess the price of risk. A number of studies have attempted to calculate the climate transition risk premium. According to AEW, this would cost 26 bp on expected total annual returns for the period 2025-2029 on Europe's main real estate markets.
This is a tricky exercise, not only because of the lack of homogeneous data on a subject as vast and complex as climate hazards, but also because of the absence of a method recognized and adopted by all players in the chain. All investors need to model their future revenues, even though reality will always differ from forecasts.
Numerous initiatives are attempting to quantify the vulnerability of real estate assets to climate change. The first figures published are chilling. The French Environment and Energy Management Agency (Ademe) estimates that a "delayed" climate transition could lead to nearly €1,100 billion of stranded assets by 2050. Behind the introduction of risk identification and assessment tools lie new ways of reading the facts before investing in real estate.
But beyond the risk premium, it is perhaps the cost of inaction that may be worth even more to the investor on exit. A euro spent today can avoid losing four to six euros tomorrow, we're told. However, there's no guarantee that you'll be safe from all climatic contingencies. Because when we talk about the vagaries of the weather, we mean... vagaries!