Real estate in Berlin, Toronto, Paris and Madrid most resilient to climate change
Berlin, Toronto, Paris and Madrid’s real estate markets have some of the lowest risk overall to climate change, says Savills in its new Climate Resilient Cities Index, launched as part of Impacts, its global research programme.
Although they may still be vulnerable to significant climate hazards, their geographic positions, combined with other factors including city authorities having a plan to mitigate risk and higher proportions of ‘green’ real estate, make them the most resilient overall of the cities Savills examined.
The international real estate advisor looked at a representative group 23 of the world’s largest, wealthiest and most populous cities that are particularly important for global real estate investment. It then measured each city’s climate risk and the resilience of its real estate to those risks. Berlin is the best performing city Savills examined: its geographic position means its risk of climate change-related events is low, while it has a strong real estate resilience score due to factors including having a low share of stock identified as being at likely risk from climate-related damage and one of the highest proportions of buildings ‘green’ certified. Savills, however, notes that even the cities that perform best for real estate resilience have significant work to do in improving the sustainability of their stock.
“While our index is selective, and shouldn’t be used as a league table, it does highlight to investors, developers and occupiers some of the cities which are most at risk of climate-related events and whether real estate in those cities is likely to be resilient to that risk, comments Paul Tostevin, director, Savills World Research. “While there may be little possibility of altering the former given that risk is largely location-dependent, more can be done to increase real estate resiliency by adopting innovative design and build practices and delivering mitigating infrastructure – building storm drains to reduce flooding, for example.
“In addition, our research highlights that even in cities which have ‘good’ real estate resilience, a lot of work is still required to reduce carbon emissions and upgrade assets to higher sustainability standards. New York and Berlin score best on this metric, having 1.8% and 1.5% respectively of ‘green’ real estate stock per capita, but this is still a low proportion both given the urgency of fighting climate change and the fact that investors are actively looking to acquire the most sustainable stock to reduce their exposure to possible stranded assets.”
Green certified real estate stock per capita, one of the real estate resilience metrics from Savills Climate Resilient Cities Index:
| City | Country | Green RE stock per capita |
| New York | United States | 1.80% |
| Berlin | Germany | 1.50% |
| Beijing | China | 1.20% |
| Toronto | Canada | 1.00% |
| Shanghai | China | 1.00% |
| Los Angeles | United States | 0.90% |
| Madrid | Spain | 0.70% |
| Hong Kong (City) | Hong Kong | 0.60% |
| Stockholm | Sweden | 0.50% |
| Dubai-Sharjah-Ajman | United Arab Emirates | 0.40% |
| Miami | United States | 0.30% |
| Sydney | Australia | 0.30% |
| São Paulo | Brazil | 0.20% |
| Amsterdam | Netherlands | 0.20% |
| Seoul | Seoul | 0.20% |
| Singapore | Singapore | 0.20% |
| London | United Kingdom | 0.10% |
| Paris | France | 0.10% |
| Tokyo | Japan | 0.00% |
| Jakarta | Indonesia | 0.00% |
| Delhi | India | 0.00% |
| Cape Town | South Africa | 0.00% |
| Cairo | Egypt | 0.00% |
Source: Savills Research
Robert Godfrey, director in strategic investment advisory, Savills, adds: “In a city where the climate stability risk is high and real estate resilience low, this could affect the attractiveness of its markets, as major institutional investors already consider climate risk as part of their ESG strategies. Investors may increasingly seek more resilient and green real estate in climate stable cities, but at the moment they will be competing over relatively few buildings that meet all those current and future needs.”