Sydney, Aug 7: Climate change is increasingly influencing the real estate market, prompting investors to reassess property values and strategies.
Lloyd Edge, a seasoned property investment strategist and best-selling author, highlights the risks and opportunities in this evolving landscape.
Rising sea levels and extreme weather events are reshaping coastal property values.
Research by the Department of Climate Change indicates that Australian sea levels have risen significantly since 1880, with projections suggesting a substantial rise by the end of the century.
“Investors need to be aware of the long-term implications of sea level rise on coastal properties,” says Edge, emphasising the importance of due diligence regarding local government planning and flood mitigation measures.
The increasing frequency and intensity of heatwaves and bushfires also affect properties in vulnerable areas.
The 2019-2020 bushfire season, known as Black Summer, burned millions of hectares and destroyed thousands of properties.
A study by the World Weather Attribution initiative found that the risk of intense fire weather has significantly increased due to anthropogenic climate change.
Edge advises, “Investors need to consider fire risks in their property decisions, prioritising fire-resistant materials and strategic landscaping to enhance long-term value and resilience.”
Certain regions and property types offer more resilience against climate change impacts.
Higher elevation areas or those with robust infrastructure to withstand extreme weather events are considered safer investments.
Cities like Melbourne and Sydney are investing in green infrastructure projects to enhance their resilience.
Edge highlights some climate-resilient areas for investment, such as Canberra, known for its planned urban layout and higher elevation, and Hobart, which has a cooler climate and less flammable vegetation, reducing bushfire risks.
Melbourne is investing in urban forests, wetlands, and green roofs to mitigate flood risks, while Sydney’s green infrastructure initiatives and comprehensive bushfire management plans are noteworthy.
Ballarat and Bendigo, both inland locations with temperate climates, also offer reduced risks from bushfires and floods and are enhancing their green spaces and water management systems.
Edge emphasises that incorporating sustainability into investment strategies is beneficial for both the environment and portfolios.
“Incorporating sustainability into your investment strategy is beneficial for both the environment and your portfolio. Environmentally friendly properties tend to attract higher-quality tenants and enjoy higher occupancy rates,” he states.
Edge also provides several key tips for sustainable property investment. He advises investors to research location vulnerabilities and understand climate risks associated with the investment area. Investing in green buildings certified by green building standards, considering future-proofing properties by adapting them to future climate conditions with renewable energy, improved insulation, and water-saving technologies, staying informed about climate policies and regulations, including government incentives for sustainable practices, and engaging with climate and sustainability experts to assess long-term viability are all crucial steps.
As climate change continues to affect the real estate market, investors must adapt strategies to manage risks and capitalise on opportunities.
Edge concludes, “The future of property investment lies in understanding the interplay between climate change and real estate. By incorporating sustainability and resilience into their decisions, investors can protect assets and contribute to a more sustainable future.”
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