Protecting value in real estate – Managing investment risks from climate change
Growing climate and sustainability regulatory pressure from EU institutions and member states, increased market demand for green buildings, and heightened risks from physical impacts on buildings associated with climate change, are changing real estate market conditions. This paper analyses how these trends are impacting occupier demand and investor practices.
There is a growing consensus among market professionals that demand for buildings with green characteristics will continue to increase and that such characteristics are already influencing investment fundamentals including client demand, void lengths, obsolescence, rate of depreciation, operational costs, and liquidity. We argue that, in order to protect the long-term value of their real estate investments, it is part of institutional investors and their investment managers’ fiduciary duty to understand and address these changes and new risks and to take advantage of new market opportunities.
Investor practices programme
Derivatives and Hedge Funds Discussion Paper