Climate risk is turning insurance and resilience into deal factors
As only about 25% of EU climate catastrophe losses are insured, buyers are factoring long-term costs into pricing decisions
The increasing awareness of climate risk is having a profound impact on the way insurance and resilience are being factored into deal decisions. With only about 25% of EU climate catastrophe losses being insured, it's clear that there's a significant gap in coverage. This gap is leading buyers to consider the long-term costs of climate-related risks when making pricing decisions, which is a prudent move given the rising frequency and severity of extreme weather events.
In the context of the real estate and property industry, this trend is particularly relevant. As investors and developers assess the viability of projects, they're increasingly taking into account the potential risks and costs associated with climate change. This includes not only the direct costs of damage or loss, but also the indirect costs of decreased property values, disrupted supply chains, and regulatory changes. By factoring these costs into their decision-making, buyers are able to make more informed choices about which properties to invest in and how to price them.
As this trend continues to evolve, it's likely that we'll see a greater emphasis on resilience and risk mitigation in the property sector. Investors and developers will need to prioritize properties that are designed and built with resilience in mind, and to factor the costs of climate-related risks into their pricing decisions. To watch next: how will governments and regulators respond to this trend, and what role will they play in supporting the development of more resilient and sustainable properties? Will we see new policies or regulations that incentivize or require builders to incorporate climate resilience into their designs?
Originally reported by housingwire.com. LotNews adds analysis for real estate & property readers.