Global Investors Focus on Future-Proofing Their Portfolios
The resilience of property portfolios to environmental stresses is a growing concern for real estate investors with a long-term horizon. With financial costs of environmental hazards apparently reaching new highs,1 there is renewed focus on how assets can be made more resilient.
CBRE Research conducted a six-month study, including interviews with global investors and property managers, to understand current resilience strategies. Explore our findings below and download the full report to learn more.
Why Have a Resilience Strategy?
In 2018 alone, hurricanes Michael and Florence wreaked significant property damage in the U.S. and typhoons Jebi, Mangkhut and Trami impacted properties throughout Asia. The World Economic Forum’s “Global Risk Report” ranks extreme weather events, climate change and natural disasters as the top-three global risks in 2019.2
Natural Hazards by Country of Property Manager Interviews
How Investors Are Employing Resilience Strategies
1) Pre-Acquisition Due Diligence
Identify exposure to significant events that may reduce investment value during the due-diligence stage.
2) Mitigate Insurance Claims
Understand asset-level risk, potentially involving extensive modelling of various catastrophe scenarios.
3) Review at Portfolio Level
Measure exposure to environmental hazards at a portfolio level.
4) Review at Building Level
Identify buildings that likely need some action taken depending on the severity of the potential risk.
5) Reporting & Disclosure
Adopt new reporting standards on resilience, such as GRESB and TCFD.
6) Partner with Property Managers
Managers interface with building owners, tenants, contractors and local authorities, enabling them to help enhance building-level resilience.
Property Managers Can Help Enhance Building Resilience
Property Managers can work with investors to implement practices that help protect buildings before, during and after a damaging environmental event.
- Identify gaps in building protection and upgrade existing features to mitigate higher risk.
- Ensure engineering support is available to keep vital systems operating.
- Repair existing protection as part of a program for planned preventative maintenance.
- Conduct tests to ensure emergency systems and back-up generators work properly.
- Educate tenants about the risks in their building and how to respond to them.
- Establish systems and alerts for early warning.
- Depending on the level of threat, ensure buildings have adequate emergency supplies.
- Take measures to reduce the damage, providing it is safe to stay on site.
- Liaise with emergency support teams to deal with issues as they arise.
- Contact local authorities to make sure roadways to building are clear for emergency support teams.
- Ensure communication between property managers and emergency teams can take place even if mobile networks fail.
- Assess whether the building is safe to re-enter.
- Partner with the building owner/asset manager to activate disaster recovery plans.
- Assess damage.
- Assess whether current protection is sufficient to deal with future events.
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Chairman, Americas Research & Senior Economic Advisor
Head of Research, Continental Europe; Head of Thought Leadership and Data Strategy, EMEA
Global President, Property Management and Investor Leasing
Executive Managing Director