Before, climate change was more of a peripheral concern for real estate business owners. Today, it has risen up the ranks and is now one of the primary worries in this industry. With recent data findings like 40% of carbon emissions comes from the real estate sector, climate change has become an even bigger concern for this sector.
The real estate sector is finally seriously thinking about the negative impact they have on the environment, which includes re-evaluating their properties, project management strategies, and construction work to make everything more sustainable. International investors of real estate and many countries making promises for net-zero emissions from their countries play a major part.
But everything is not so grim because of the climate change news. Of course, there are many adverse effects, but there are some opportunities in the fine lines in between. In this article, we have carefully curated the impact of climate change on real estate assets and the opportunity it holds for your business. Read the complete article to find out how.
Climate change and its different facets affecting real estate
As far as the real estate business is concerned, the factors mentioned below in climate change are making it more challenging for real estate leaders to ensure growth and drive sales. Check them out.
Rising temperatures
The overall temperature of our Earth is rising at an alarming rate. The US National Oceanic and Atmospheric Administration (NOAA) reports have said that in this March 2022 was the hottest March in the last 143 years. These rising temperatures have a direct impact on the rising costs of managing properties. Residents are overusing the HVAC systems to beat the heat waves scorching across the globe. The use of fans has also become an extra addition and is raising the overall electricity and fuel bills of buildings and putting pressure on maintenance systems.
To get ahead of this problem, you need to get an energy audit done to understand which areas in your properties are causing the maximum energy loss. You can get them fixed immediately and get Energy Star appliances in all your properties to cut down on the overall cost of maintenance and electricity bills.
Extreme weather conditions
There has been a significant rise in the number of cyclones, tornadoes, and flash floods across America. Scientists have been looking at the alarming rise of hurricanes, especially in the Atlantic belt. The risk of property damage due to the increased frequency of such tropical cyclones and other extreme weather events affects the properties on the coastlines. Such incidents create flood-like situations, and the rising water levels affect the structure of the properties and cause permanent damage, and selling them becomes even more complicated.
Rising sea levels
A recent study by the Proceedings of the Nation Academy of Sciences of the United States of America (PNAS) revealed that around 200 million people across the world will be displaced due to rising sea levels by 2100. According to Business Insider reports, more than 7 American cities are said to be at risk of going underwater in the next few decades. The steep rise in water levels is decreasing the property values around the coastal areas at high risk. A research study by the Union of Concerned Scientists (UCS USA) predicts that more than 300,000 homes in the US stand a chance of being flooded regularly by 2045 if there is no immediate action to solve this impending crisis.
Long term property damage due to climate change
Such extreme weather conditions and climate changes are leaving their permanent marks on the properties. They are causing long-term structural damage that will cost humongous amounts of money to fix. Properties on such high-risk coastlines are becoming unattractive to real estate investors and owners because tenants do not wish to stay with the constant fear of another natural disaster hitting them soon. The current effect of climate change on real estate is two-fold. Here’s how.
Property prices are going down in affected areas
“Disaster on the Horizon: The Price Effect of Sea Level Rise,” a research study published by the University of Colorado, found that property prices in areas affected by climate change were getting paid 7% less than the standard property value of other places.
Home sales are much lesser in high-risk areas
Market Watch reports also found that rising-sea level areas see lesser demand for homes, and sales have gone down significantly. Earthquake-prone areas, high-temperature areas, and such places also see the same kind of home-buying trends.
The future - Include climate change risks into asset and property valuation
Climate change tends to affect every aspect of a building and its value. Many assets have a high carbon footprint, which further contributes to the problem of climate change. Looking at the bigger picture, real estate businesses across the globe must re-evaluate their asset management and property management to decrease the overall carbon footprint. There will be no constant traveling between offices, multiple properties and units, and construction sites to manage the business. Automating these recurring management tasks with the proper selection of technology in project management can seriously cut down on the carbon footprint.
You can also get energy audits done on your properties and get proper evaluation reports on your assets to understand which are consuming more energy. You can get them repaired or replaced with better assets to save fuel and positively impact the climate change cause. You can even hire a professional project management consultant to help you rethink your future plan in decarbonizing your real estate business to make it more sustainable and eco-friendly.
Summing Up
The Assetsoft team works with a team of technology and real estate experts and can help you with an assistive technology implementation plan to chalk out a sustainable business plan. From providing you with the right advisory services in project management to helping in the technology selection process for your property management needs, we have a solution for all your real estate business needs.
Get in touch with us today to get more details about our services. Talk soon!