In the US, extreme weather & rising water levels is destroying real estate values. The cost: $300 + billion, mostly to residential & commercial real estate. For investors, measuring opportunity against risk is critical & big real estate firms in the US are spending the money to calculate climate risk & its effect on property portfolios.
This would be helpful in Canada too. Considering the top 10 Canadian pension funds make about $150 billion in commercial real estate investments (office, retail, multi-residential, industrial & hotels) around the world, how many large commercial properties are located in flood-prone areas? Will insurance still cover $1M losses at an affordable premium? Who will take on the risk of ownership if insurance is unavailable?
After the July 2013 floods in the GTA, the estimated average claim on commercial property & casualty insurance was $70,000, with larger commercial properties average claims exceeding $1M.
All stakeholders need to get on board with a plan: build for resilience; implement strategies to map & mitigate physical risk; and include climate risk into due diligence.
