New findings reveal escalating climate risks and economic impacts on the office sector.
CBRE has released a new report on the economic impacts of climate change on the office sector in Continental Europe, focusing on Denmark. The report stresses the urgent need for proactive risk management to address increasing climate-related risks.
Key Findings:
- Impact on Valuations: Higher flood risk leads to lower rental values, making location crucial for asset valuation. Properties in high-risk areas are seeing a decline in rental values, affecting overall asset valuations. This trend highlights the necessity for investors to integrate climate risk assessments into their decision-making processes.
- Insurance Costs: More frequent and severe weather events are raising insurance premiums and reducing occupier appeal. This shift necessitates a reevaluation of insurance strategies and occupier preferences, with a focus on enhancing resilience to climate-related risks.
- Investment Strategies: Investors must consider climate risks in their decisions to protect asset value and ensure long-term viability. The report emphasizes the importance of integrating climate risk assessments into investment strategies to safeguard asset value and ensure long-term investment viability.
Proactive Risk Management:
The report calls for detailed data analysis, innovative insurance solutions, and collaboration among stakeholders to manage climate risks effectively. By adopting comprehensive risk management strategies, investors can better protect their assets and ensure long-term value retention. The report also highlights the need for greater collaboration between investors, insurers, and policymakers to develop and implement effective risk management strategies.
"We are seeing a major shift in the real estate market due to climate-related risks," says Dragana Marina, CBRE's Sustainability Research Lead in Continental Europe. "Our report highlights the need for proactive strategies to mitigate these risks and protect asset value. By understanding and addressing these challenges, we can create a more resilient and sustainable office sector. It is imperative that we act now to safeguard our investments and ensure the long-term viability of the office sector in Continental Europe."
Proactive risk management involves leveraging comprehensive data and advanced modelling to assess climate risks, addressing insurance gaps with innovative solutions, and integrating climate risk into investment decisions for long-term sustainability.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2024 revenue). The company has more than 140,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
