Resilient Real Estate: How Buildings Adapt to Climate Risk

• A climate-resilient property is designed and constructed to withstand and recover from climate disasters, minimising damage and disruption.
• Property owners can address climate risks by adopting proactive strategies like climate risk identification, resilient design, flood protection measures, and regular maintenance and enhance resilience.
• Investing in climate-resilient infrastructure is crucial for long-term value, as it can help avoid costly repairs, reduce insurance costs, and ensure business continuity.

Despite a recent report by global investment group GIC warns that the real estate market could lose up to $559 billion (or 28% of real estate asset value) from physical climate risks by 2050, buildings continue to take direct hits from changing temperatures and climate-related events.

However, some insured property owners and investors still rely on fragile premium coverages - probability to deny claims in event of extreme costs - to make business decisions, while ignoring the importance of futureproofing against unprecedented disasters.

This paper explores the concept of climate-resilient real estate, focusing on how buildings adapt to climate risks like flooding, storms, wildfires, and heat stress.

As a property owner or investor, have you ever considered futureproofing your building against potential climate disasters? If the answer is yes, then you are probably familiar with some key features of a climate-resilient property. In fact, a 2024 survey by JLL of UK investors in commercial real estate (CRE) shows that 94% of respondents are ‘actively implementing or considering climate risk mitigation and adaptation within their portfolios.’

Additionally, the study predicts that 45% of them are likely to focus solely on climate-resilient buildings by 2030. This suggests that resilient real estate has the potential to improve your investment returns and promote long-term profitability.

Prior to investing in climate-resilient properties, consider the following criteria:

• Flood protection measures

  Installing flood-proof barriers, elevating electrical and mechanical systems, and using flood-resistant materials can protect your property from flood damage.

• Storm-resistant design

  Designing buildings with storm-resistant materials, such as impact-resistant windows and doors, can help withstand strong winds and flying debris.

• Wildfire-resistant construction

  Using wildfire-resistant materials, such as fire-treated wood and ignition-resistant roofing, can help protect your property from wildfires.

• Energy efficiency

  Incorporating energy-efficient systems and materials can help reduce energy consumption and greenhouse gas emissions.

• Water conservation

  Installing low-flow fixtures and greywater reuse systems can help conserve water and reduce the risk of water scarcity during climate-related disasters.

• Adaptive reuse

  Designing buildings with adaptive reuse in mind can extend their lifespan and reduce waste. This can also help lower repair or replacement costs.

• Climate-informed siting

  Carefully selecting the location of your property to avoid areas at high risk of climate disasters is a crucial step in promoting property resilience.

In case you are not familiar with the term 'flood-resistant infrastructure', it simply refers to design and construction techniques that prevent or minimise flood damage to buildings.

This is crucial in addressing property-level climate risk like flood risk, and it is essential for you as a property owner or investor to consider when investing in resilient real estate.

In fact, according to the Department of Homeland Security (DHS), flooding is the leading cause of natural disaster losses in the US, covering up to 90% of natural disasters and threatening 12.2% of US home values.

In tandem with other events such as storms, the damage could be exponential.

In Southern Germany in 2024 for example, severe flooding (fuelled by heavy storms) caused €30 billion ($32.6 billion) in insured property loss.

Many Germany homeowners and investors are on their own to face future flood risks, as the state and private insurers 'cannot always simply cover the costs of the damage', according to the Bavarian Prime Minister Markus Söder.

To avoid such situation, here is how adopting flood-resistant infrastructure can shield your property:

• Elevated foundations

  Elevating buildings on pilings or columns can help keep them above floodwaters.

• Flood-proof barriers

  Installing flood-proof barriers around buildings can prevent floodwaters from entering.

• Waterproof materials

  Using waterproof materials, such as ceramic tiles and water-resistant membranes, can help prevent water damage.

• Grading and landscaping

  Grading and landscaping buildings to direct water away from them can help reduce flood risk.

• Storm water management systems

  Installing stormwater management systems, such as rain gardens and bioswales, can help reduce stormwater runoff and prevent flooding.

Storm events have been increasingly destructive to infrastructures and costlier for homeowners and investors in recent years, particularly in the US.

While billion-Dollar devastations from Helene and Milton are still felt in the economy and communities, it equally pushed real estate owners, developers, and investors to rethink building resilience against storms.

However, Craig Fugate, former FEMA Administrator, warns that "funding, while necessary at times, can have longer-term implications for projects intended to build resilience ahead of the next storm".

Most of these implications regard identifying the type and cost of materials to use and the design strategies to implement. As a property owner or developer, choosing the correct materials and design strategy is crucial to ensure your building can withstand storm forces.

For stormproofing, you should consider:

Stormproofing Materials:

• Impact-resistant windows and doors

  Installing impact-resistant windows and doors can help prevent wind-borne debris from entering buildings.

• Reinforced roofing

  Using reinforced roofing materials, such as metal or clay tiles, can help prevent roof damage from strong winds.

• Fibre-mesh reinforced panels

  Incorporating fiber-mesh reinforced panels can provide additional strength and durability to building walls and roofs.

Design Strategies:

• Designing for wind loads

  Designing buildings to protect against wind loads and structural damage.

• Regular maintenance and inspections

  Regularly inspecting and maintaining buildings to ensure they remain storm-resistant.

• Elevating critical systems

  Elevating critical systems like electrical and mechanical systems, to prevent flood damage.

Wildfires, like the 2025 Los Angeles (LA) fire outbreak, have raised concerns about future-proofing real estate assets against increasingly frequent and intense fires.

As a property investor, you may have been affected by the rise insurance premiums across the US and Europe, especially in at-risk regions - with insurance already over 30% for US homeowners living in Florida, Texas, and Louisiana in 2023.

However, instances like Southern California, where wildfire damage exceeded $250 billion and insurance claims - some of which already paid out at over $4 billion in LA areas - were denied, constitute a reason to invest in wildfire-resilient real estate.

Janet Ruiz, Director of Strategic Communication at the Insurance Information Institute (Triple I), notes that 'denied claims are normally due to being lower than the deductible or non- covered losses and perils such as flooding, landslide, maintenance rather than a direct accidental loss'.

While fire insurance coverage is necessary, investing in wildfire-resilient real estate offers an additional layer of protection and ensures long-term value.

As key considerations, here is how you can approach wildfire-resilient real estate:

1. Climate risk identification

   Understanding climate risks associated with a property is crucial for informed investment decisions.

   In this sense, self-service tools like our product Spectra can provide you with real-time and accurate data to help you answer key questions:

   • Which physical climate risks are my properties exposed to?
   • How much am I susceptible to lose in X region until 2100?
   • What is the best-case scenario?
   • What is the worst-case scenario?

   Our CEO and Co-founder Lukky Ahmed emphasises that "real estate is where we see the most immediate financial impacts of climate change - valuation, insurance, lending".

   He adds that "clients don't just need data - they need to understand what they mean for their business decisions".

2. Defensible space creation

   Creating a defensible space around buildings by clearing flammable vegetation around the property can help prevent wildfires from spreading.

3. Fire-resistant material selection

   Using fire-resistant materials like stucco or brick helps prevent buildings from igniting.

4. Wildfire-resistant design

   Designing buildings with wildfire-resistant features like ember-resistant vents and fire-stopping materials can stop wildfires from spreading.

5. Regular maintenance and inspections

   Frequently inspecting and maintaining buildings and surrounding landscapes will keep wildfires from starting and spreading.

You are likely aware of the dangers of increasing frequency and severity of heatwaves in urban areas.

Heat stress can have devastating effects on urban buildings, and also caused an increase in energy consumption and a decrease in occupant health.

To address these effects, it is crucial to incorporate heat-reducing strategies into your building.

In fact, heat stress in Paris—one of the hottest cities in Europe—reached scorching temperatures of 34°C with humidity levels as high as 70%, as recorded during the summer 2024 Olympic Games.

The heat stress was exacerbated by the urban heat island effect, as concrete used in Parisian urban infrastructures store more heat than a rural zone.

Some strategies for cooling cities include:

• Green roofs and walls

  Incorporating green roofs and walls is helpful to reduce urban heat islands by providing insulation and evaporative cooling.

• Shading devices

  Installing shading devices, such as awnings or overhangs, can help block direct sunlight and reduce heat accumulation.

• Cool pavements

  Using cool pavements like lighter-coloured asphalt can minimise urban heat islands by reflecting solar radiation, rather than absorbing it.

• Evaporative cooling systems

  Installing evaporative cooling systems can help reduce energy consumption and provide cooling relief.

• Smart building design

  Designing buildings with smart building design strategies such as natural ventilation and passive solar design. This can help reduce heat stress and energy consumption.

As you explore climate-resilient infrastructure design techniques, technological innovation is rapidly gaining momentum in boosting climate adaptation in the real estate sector.

As Ahmed expresses, 'there is an opportunity to leapfrog traditional systems and define the new standard'.

Smart infrastructure refers to the integration of technology and data analytics into infrastructure design and operation.

This can support the optimisation of energy efficiency, reduce greenhouse gas emissions, and activate preventive and protective features in the event of climate catastrophes

Some roles of smart infrastructure in property climate adaptation include:

1. Real-time monitoring and alerts - Smart infrastructure
2. Predictive maintenance - Innovative features
3. Optimised energy efficiency - Smart infrastructure
4. Enhanced resilience - Although not necessarily an integrated feature in property system, a regular property resilence assessment by climate risk expert is important.

When partnering up with Climate X, tools such as Adapt provide you with real-time information on the best approach to adapt and expand your investment and maximise return. This can help you answer questions such as:

• What are the most effective adaptation strategies to improve my property's resilience to a specific disasters?
• What are the potential long-term cost savings of incorporating climate resilience features into my property?

Climate-resilient real estate stands as a critical solution to climate change risks, by implementing strategies like:

• Flood protection,
• Storm-resistant design,
• Wildfire-resistant construction.

These approaches can help extend the lifespan of your properties and maintain a long-term value on your investments.

As the sector continues to evolve and climate disasters worsen, prioritising climate resilient real estate will be essential for adapting your assets and remaining a winner in the evolving market.