Guest editorial

Pages322-323
DOIhttps://doi.org/10.1108/JPIF-07-2018-096
Date18 September 2018
Published date18 September 2018
AuthorGeorgia Warren-Myers
Subject MatterReal estate & property,Property management & built environment
Guest editorial
Risk assessment is becoming an increasingly important component of due diligence and the
management of assets. As a result, the valuation profession need to be aware of decision
makers changes to approaches for investment and asset risk analysis. Yet, one of the most
significant risks to property is gettinglittle attention within the sector, by owners, investors,
occupiersand valuers; is the associatedimplications of climate changefor property. Albeit, the
property sector is not immune to risks associated with natural disasters or extreme weather
events, and this is well known and forms part ofthe analysis and consideration in valuation.
However, the future projected consequences of climate change and the implications
of increased extreme weather events, severe temperature durations and sea level rise have
a detrimental, immediate and significant impact on property. Yet, at present, there is little
research or discussion being held as to examining the implications for the property sector;
risk assessment or contemplation and consideration in investment or valuation.
Increasing catastrophic events as a result of climate change will have a substantial
impact on the property sector financially, physically and socially. Furthermore, sea level rise
will affect many cities, regions and whole countries; and this risk is being substantially
underestimated in its implication for property. The financial cost repercussions for property
is only going to escalate, as populations grow, a larger percentage of property residential,
commercial, infrastructure situated in cities will be at risk and the incidence of events will
exacerbate the economic and social impact.
The property sector is directly responsible for 40 percent of the worlds global greenhouse
gas emission, 40 percent of solid waste generation, 20 percent of the worlds water usage and
a third of the worlds resources, with the commercial property responsible for just under half
of these (UNEP SBCI, 2006). Furthermore, the property industry as a whole has some form
of responsibility be it through owning, selling, leasing and/or management. Hence, there is
significant opportunity for mitigation and adaption in the sector that will ensure a more
resilient built environment for future generations.
As the issues and associated implications of climate change become clearer for owners,
investors and occupiers, this will affect prices paid and subsequently, valuers and their
valuations. A key point to note is that valuations need to reflect the market so, if the market
is not pricing in climate change risks, then the valuer should not reflect that in the valuation.
The risks to property and value are notable, yet limited research has investigated current
approaches to risk assessment or investigated value implications.
What approaches,considerations, analyses areowners and investors using to examinethe
inherent climate change related risks and is this affecting the value in their opinion, if so by
how much and how is it being evaluated? As it is the role of the valuer to reflect the market
in the assessment of marketvalue. The question being, for some property, withina period of
time there will likely be a total loss of theproperty due to say, sea level rise,which means the
concept of an income in perpetuity for that property is not realistic. However, if the market
is not considering this in their actions, valuers are effectively constrained in their valuation
because of marketactivities ignoring this risk; yetthe risk to income and future value maybe
catastrophic.We may think and argue that the marketis wrong and irrational to ignorethose
Journal of Property Investment &
Finance
Vol. 36 No. 4, 2018
pp. 322-323
© Emerald PublishingLimited
1463-578X
DOI 10.1108/JPIF-07-2018-096
My thanks to Georgia Warren-Myers for acting as Guest Editor for this special issue. This allowed me
to write a number of papers with co-authors and ensure that they were submitted for the normal review
procedure for those paper types. Nick French
322
JPIF
36,4

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