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Climate change changes everything - especially for the real estate sector

Take climate change into account and avoid financial losses by adjusting your portfolio on the basis of sound climate risk data.

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    No industry is more directly affected by the impacts of climate change than the real estate sector. It is high time to respond in an effective way.

    Avoid the potential devaluation of your portfolio and associated financial losses by using Location Risk Intelligence and its editions to identify properties in potentially exposed areas that are most likely to be affected by natural disasters such as storms, floods, wildfires or extreme heat in the medium to long term.

    You can also protect yourself in the short term against the potential cost of repairing climate-related damage by proactively adjusting your insurance cover to minimise any potential loss of value in the event of a claim.


    In 2023 alone, 45 natural hazards occurred worldwide, each causing at least US$ 1 billion or more in damage.* As a result, your portfolio management, reporting and due diligence requirements will also increase.

    *Source: Munich Re, NatCatSERVICE, January 2024
    Sea level rise
    © Munich Re

    Turn your top 5 climate change challenges into your top 5 success factors

    In the real estate industry, climate change and the associated increase in extreme weather events have added an additional risk of critical importance that you need to keep a close eye on. Exceptionally high levels of precipitation, flooding, hurricanes, wildfires and chronic risks such as heatwaves or rising sea levels are causing more frequent and higher damage to buildings in risk areas, which can lead to unplanned write-downs or losses due to premature sales.

    With Location Risk Intelligence and its editions, you are a decisive step ahead. Significantly improve your risk management by determining and visualising the risk exposure of individual assets or entire portfolios up to the year 2100 based on current and expected future climate risks and documenting them in meaningful reports.

    As a result, you can build valuable climate risk expertise which you can use in current and future decision-making to ensure that your investments are secure and successful in an era of climate change.

    What makes one asset different from another? In addition to many traditional factors, resilience to climate risks is becoming increasingly important.

    There is a growing number of properties, be they homes, apartments or commercial buildings, that are becoming uninsurable, unsaleable and ultimately unusable because of their location. What until recently was considered a good investment can quickly become a total loss.

    Location Risk Intelligence supports you in assessing the resilience of properties to climate risks with a wide range of predictive models based on sound data and easy-to-understand visualisations. This is because changes in our climate are increasingly leading to basic requirements such as the availability of water and energy at affordable costs, or a functioning infrastructure with traffic and transport routes, service providers, schools etc. no longer being guaranteed in the future.

    And conversely, you can identify regions for future investment that will become desirable for companies and people if they have to move away from areas that will no longer be attractive and worth living in due to the effects of climate change.

    Climate change offers opportunities for those who know how to use their climate risk expertise to take advantage of them.

    You can either sell previously high-yielding commercial properties that are at risk of losing their attractiveness and value due to increasing climate risks while you can still achieve a good price for them, or take targeted measures to make them more resilient to natural disasters or chronic risks.

    Location Risk Intelligence supports you with a wide range of climate scenarios. Of particular interest in this context is the 'undefended' vs. 'defended' scenario, which allows you to estimate the scope of the measures required and make a data-based decision. 

    You can also use this knowledge to acquire financially attractive assets that you can significantly enhance through appropriate protective measures.

    Climate-compliant construction does not mean the same thing everywhere. After all, the requirements for a building depend very much on its location and how the climate there will develop in the future.

    Location Risk Intelligence is the ideal tool here to run through various scenarios before the planning stage. With the knowledge gained, the construction and materials of a building can be defined in such a way that it will continue to function in the future despite changing conditions, and remain an attractive place that is designed from the outset to meet the changing expectations of its users. A very similar approach can also be applied to existing properties to make them fit for the future and therefore attractive as a long-term investment.

    Here you benefit in particular from 9 climate change risk scores and 35 climate change variables to evaluate a property or a specific location in great detail. To name just a few, you can determine future changes in the average temperature as well as the number of days expected to exceed 35°C, or the amount of precipitation predicted: parameters that are crucial when planning a building project. 

    The global shift from voluntary to mandatory reporting and your customers' increasing demand for more transparency are putting pressure on you to disclose how your assets are affected by climate risks and what measures you are taking to minimise these impacts.

    At first glance, this may seem like an additional burden for you, but on closer inspection there are real benefits and opportunities for you and your company. Provided you have the right tools in place, such as Location Risk Intelligence, you can make reliable, data-driven predictions about the value of your investments, taking into account the expected impact of climate change well into the future. 

    On the one hand you can review your existing portfolio and identify assets which could be impacted. You can then take steps such as installing defences which will make them more resilient to climate risks and may not only maintain but even increase their value, or alternatively dispose of them while you can still do so at a reasonable price. On the other hand, you can examine future investments in detail in advance and evaluate them on the basis of scientific data to minimise your risks as far as possible.

    This puts you in the comfortable position of being able to offer verifiably future-proof investment opportunities and gives you an invaluable competitive advantage. 

    In times of climate change, real estate isn't always worth banking on - especially for banks

    If you are a bank and you provide a mortgage for the purchase of a property, you should take a closer look at the transaction in the light of climate change. What appears to be a safe investment today could be a total loss in the near future.

    This is the case if the property is affected by a natural disaster and the damage is not adequately insured. Either the property is so badly damaged that it no longer has an adequate equivalent value, or the cost of repairs is so high that the borrower is financially unable to meet his or her obligations to you. In the case of commercial property, mortgage defaults can occur even more quickly if - depending on the degree of damage to the company's premises – it is no longer possible to maintain business operations, which often results in insolvency and thus the inability to pay. 

    With Location Risk Intelligence you can significantly reduce these climate-related risks by assessing each property's exposure to natural disasters before granting a long-term mortgage. 

    Better decisions, better business!
    Book your demo right now.

    How you as a real estate company can manage climate risks more efficiently and accurately with Location Risk Intelligence

    Increase your efficiency
    Location Risk Intelligence helps you to automate the processes of assessing risks and taking investment decisions. It offers easy and intuitive data access via web applications or API data integration for further use of risk data in your own business systems. This enables you to make more investment decisions in less time, thus increasing productivity.
    Benefit from accuracy
    Full coverage of natural catastrophe and climate risks gives you all the data you need to make decisions. For today and for the future. Premium data quality that you can rely on increases the accuracy of your investment decisions, optimises risk selection and improves profitability. This minimises the risk of faulty judgements and enables you to make more informed decisions.
    Achieve more consistency
    Our risk management software solution can help real estate owners and investors to ensure that decisions and guidelines are applied consistently. Munich Re has long-standing expertise in understanding and assessing the risks of natural catastrophes and climate change.
    Make data-driven decisions
    Thanks to global data coverage we provide you with consistent data sets that take into account current and future risk exposures, enabling you to make risk-sensitive short-term as well as long-term strategic decisions.
    With a global portfolio of our size, Prologis makes reliable measurement a priority to inform our data-driven decision-making process. Munich Re has been our trusted partner to measure the impact of climate change across our real estate portfolios. Their Location Risk Intelligence Platform provides us with assessments on not only our entire portfolio, but also on individual assets. These insights provide us in-depth knowledge of our future potential risk exposure from extreme weather events.
    Jeff Bray
    SVP & Head of Global Risk Management
    RMP World Map Display
    © Munich Re

    It’s time to reduce your risks!
    Book your demo right now

    How Location Risk Intelligence Platform and its editions support you in the real estate business

    Munich Re’s Location Risk Intelligence is a modular SaaS solution that enables you to understand, measure and manage the risks posed by natural hazards and climate change - worldwide.

    The following editions are of particular interest to real estate companies as they enable you to generate up-to-date climate-related data for individual locations or entire portfolios, assess the associated risk and measure the financial impact of these risks based on scientific evidence.

    The platform supports you in particular in understanding and measuring how climate-related effects will impact your real estate investments. Location Risk Intelligence provides real estate players with climate intelligence and capabilities which support their decision-making and help them to meet their disclosure obligations by taking natural disasters as well as climate change and its consequences into account. 

    By entering individual locations or uploading entire portfolios into the Location Risk Intelligence Platform, you can easily analyse, visualise, compare, and document natural disasters and climate risks in the form of meaningful reports. The modular platform not only allows you to identify your current and future climate risks, but also to consider the financial impacts of climate change. 

    This is the ideal solution if you want to reliably quantify the financial impact of physical climate risks and take your analysis and assessment of the physical risks associated with climate change to the next level. 

    Based on one of the world's most comprehensive databases of natural disasters and hazard modelling under different climate scenarios, this edition provides detailed information on the physical exposure and expected financial impacts of climate change (Climate Expected Loss) for all locations - worldwide.

    This edition will help you not only to understand the exposure of assets to current physical risks, but more importantly to analyse and assess the physical risks associated with climate change in a wide range of future scenarios.

    Taking both acute and chronic climate risks into consideration, this edition provides information on nine climate hazard scores. And unlike the Natural Hazards Edition, the risk scores are not only calculated on the basis of past events, but also include projected changes in the intensity and frequency of future events under different climate scenarios.

    Embrace the future with confidence, powered by Location Risk Intelligence's data-driven insights. Book your demo today and start investing risk-consciously.