Mitigating Climate Risk Impact to Real Estate Value in the Greater Bay Area

Report Summary: As China’s Greater Bay Area (GBA) grows and develops, regional hazards such as storms, flooding, sea-level risk, extreme heat, and drought continue to worsen and become more frequent in the region as a result of climate change. Left unchecked, the frequency and intensity of extreme weather events will continue to rise, increasing claims against insurance policies, threatening loan default, and impacting real estate value across the GBA.

As part of their long-term commitment to addressing climate change and physical risk, ULI partnered with HSBC to examine climate risk to real estate in the GBA. Drawing on interviews with leading industry professionals operating in the region – including developers, equity and debt investors, insurance companies and NGOs – the report analyzes whether climate risk is being incorporated into real estate transactions and poses recommendations for what can be done to further address the accelerating risk of climate change.

Timely recognition of climate risk in real estate valuation is important to drive the required adaptation and mitigation action. The findings from the report include why climate risk matters for real estate, what challenges currently exist, examples of climate leadership in the region, and what various real estate actors, such as asset owners/investors, developers, values, insurers, and government bodies, can do to increase resilience.