Climate change impacts on real estate industry

Climate change is influencing every facet of life- right from our diets to our ability to survive natural disasters. Until now, the real estate sector was lacking the pace to address the gravity of climate change consequences on properties and markets. However, over the past two decades higher global temperatures and more frequently occurring natural disasters have led monstrous effects on residential as well as commercial properties.


Worldwide, real estate has a huge role in global warming. Around 40% of the total carbon-footprint comes from this sector. Real estate industry has been affected by climate change in different ways. Frequent wildfires, hurricanes, droughts, tornadoes and other natural disasters are destroying buildings and driving thousands of people from their homes and offices.

A Zurich based company, Swiss Re, through their research in 2020 concluded that the adverse effects of disasters led to a loss of approximately $105 billion in North America. Another company, Redfin, defined a value of $ 2 trillion loss in real estate brokerage in California, because of the wildfires. The home prices plummet, as the residents and the property owners being threatened by the climatic disasters flock away to different places. 

How is the industry becoming resilient?

Not only the asset management firm but also the residents and each player of other groups being directly or indirectly linked to this sector are taking tangible actions for addressing climate change action plans. Real estate investors have started adapting strategies which are:

  • Investing straight into mitigating measures for specific assets.
  • Involving themselves in local resilience strategies in collaboration with the policy makers.
  • Adapting new methods and utilizing material to limit their resources as well as their energy.
  • Integrating physical adaptation methods and different mitigation measures for the assets that possess more risk.

Adapting bold actions

The real estate as well as the construction sector are changing their thoughts and actions in way towards climate action and are also embarking visible steps for taking mitigation even further. Taking into consideration their potential role in global climate change, the real estate companies are planning to phase out even larger solutions which could help society to limit the rise in temperature to 2°C or below in the coming decade, as stated in the Paris Agreement. The real estate is planning to revolutionize itself by adapting solutions in the following fields:

Energy production: Each and every newly constructed building should be energy self-sufficient. In addition, it should also be capable to supply energy to urban networks.

Re-utilizing the raw materials: Every building being constructed should serve as a material repository. This means each refurbishment should be an opportunity to supply second hand material to other construction (infrastructure or housing, etc). 

Biodiversity improvement: Conservation as well as improving biodiversity must be a central pillar of any constructional operation, especially in densely populated urban areas, owing to both health and temperatures concerns in these areas.

Climate transition leadership: The real estate industry needs to take the lead in mitigating climate change. This could be achieved when the leaders of the industry as well as their employees are well trained in terms of utilizing the resources and the products, influencing their clients as well as the population associated for adapting deep changes.   


Carbon emissions caused by human beings are claimed to be the biggest drivers of global warming. A report issued by UN government showed that around 95% of the recent warming trends occurred due to human activities. Also, industrial revolution led to mass deforestation where forests were converted to farmlands. Needless to say, forests and trees played major role in absorbing carbon emissions and in their absence these emissions are absorbed directly into the atmosphere where they stay for a long time.  

In order to get in hands what seems no less than a revolution, the real estate sector must look rapidly, into their operations, processes as well as their supply chains. This would probably require new technologies as well as modern equipments to ensure fluidity. 

The extreme weather events are resulting in bulk of damages that are impacting residential and commercial properties. The ill-effects of climate change on real estate have become too significant to be ignored. Thus, it’s high time for the property owners, property developers as well as tenants to carry out tangible steps for mitigating global warming and taking proactive solution through their investment in sustainable buildings.


Written By:

Aakansha Raj

Aakansha holds a master's degree in biotechnology and is currently working as a research scholar. An avid reader, Aakansha finds keen interest in reading and writing on areas related to clean energy and zero carbon emissions.

Leave A Comment