[MCN] Is real estate industry aware that climate change can sink property values???

[Lance Olsen]

Commercial Property Executive June 20, 2019

https://www.cpexecutive.com/post/how-climate-change-is-affecting-real-estate-values/ <https://www.cpexecutive.com/post/how-climate-change-is-affecting-real-estate-values/>

Excerpts

To get a closer look at the relation between climate change and real estate, we talked to Turnkey Property Pro’s Principal Oliver Somoza about the issue. His real estate development company specializes in identifying, renovating and managing different types of properties.

To what degree has the real estate industry acknowledged the relation between climate change and property values?

Somoza: The real estate industry has begun to acknowledge climate change <https://www.cpexecutive.com/post/uli-heitman-climate-change-key-risk-factor-for-real-estate-investors/> as a real issue as it relates to property values, I’d say just in the past five years. Investors are becoming more aware of the devastating effects of flooding and hurricanes in tropical climates and are looking for solutions and the most suitable ways to implement them. However, climate change will be a serious threat to properties in the years to come. That’s why we need to act fast. Climate change is going to kill values for investors who are caught off guard, without a plan in place.

Has the risk associated with climate change impacted renters’ and buyers’ interest in properties?

Somoza: Climate change has certainly affected buyers’ and renters’ decisions <https://www.cpexecutive.com/post/occupancy-down-rents-up-in-post-hurricane-houston/>. As an example, Lake Havasu City, Ariz., registered a temperature of 128 degrees last year, the highest temperature ever recorded in Arizona. Climate change is forcing temps to soar, making certain areas flat-out unlivable. In addition, I am also noticing buyers steer clear of beach houses that aren’t built significantly above water level.

How will ROI be impacted by these hazards? What about taxes?

Somoza: ROI will be hit by a wave of increased insurance <https://www.cpexecutive.com/post/hurricane-harveys-insurance-impact/> and maintenance costs on damaged homes. Taxes will skyrocket. Local communities and the government will need to pay significantly more to address these problems.


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Domino effect could heat up Earth by 5 degrees Celsius  <https://www.dw.com/en/domino-effect-could-heat-up-earth-by-5-degrees-celsius-despite-paris-climate-deal/a-44968248>
https://www.dw.com/en/domino-effect-could-heat-up-earth-by-5-degrees-celsius-despite-paris-climate-deal/a-44968248 <https://www.dw.com/en/domino-effect-could-heat-up-earth-by-5-degrees-celsius-despite-paris-climate-deal/a-44968248>

Aug 6, 2018 ... Even if the Paris agreement is successfully implemented, the planet could still heat up by 5 degrees Celsius, scientists warn.

The lead authors say:

“Our study suggests that human-induced global warming of 2 degrees Celsius may trigger other Earth system processes, often called 'feedbacks,' that can drive further warming — even if we stop emitting greenhouse gases.” 

And:
“These tipping elements can potentially act like a row of dominos. Once one is pushed over, it pushes Earth toward another. It may be very difficult or impossible to stop the whole row of dominoes from tumbling over.” 


The above referenced PNAS article:
Steffen, Rockström et al. Trajectories of the Earth System in the Anthropocene. PNAS August 2018. [Open access]
http://www.pnas.org/content/early2018/07/31/1810141115 <http://www.pnas.org/content/early/2018/07/31/1810141115>
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