Listed property companies and climate hazards

The listed property company with the best climate hazard resilience is Hibernia, from Ireland. It has a normalised score of 4.6, the highest of the REITs under review. This is the average of 18 normalised climate hazard sub-scores, which are described below.

The hazards range from a rise in mean temperature to droughts and from fluvial to coastal climate risk hazards. This strong score will likely support absolute and relative rental- and valuation growth in the medium and longer term.

The table below highlights the top ten REITs with the best climate risk resilience in our universe of 68 European REITs and listed property companies. Nicolas Taleb, author of “The Black Swan”, would call these REITs the closest thing to Antifragile-to-Climate Risk. This is the average climate risk hazard per listed company, Representative Concentration Pathway (RCP) 8.5 based on a min/max normalised KR&A score, between one and six (high and low climate risk hazard).

Top 10 European listed property companies with the lowest risk to Climate Hazards 2036-2065

Property Company	Country of Listing	Sector	Assets	Climate Risk Hazard Average (KR&A Score)
Hibernia	Ireland	Office	21	4.6
PHP Group	UK	Healthcare	513	4.5
LondonMetric	UK	Diversified	18	4.4
INTU	UK	Retail	15	4.4
Tritax Group	UK	Logistics	71	4.4
British Land	UK	Diversified	100	4.3
Wihlborgs	Sweden	Diversified	294	4.3
NSI	Netherlands	Office	51	4.3
LandSec	UK	Diversified	95	4.2
Wallenstam	Sweden	Diversified	223	4.2

Source: KR&A 2022, based on RCP 8.5 Numbers are based on regional climate risk, and portfolios are weighted by GLA of the individual assets, as most REITs do not disclose the values of their assets to shareholders. The above numbers are based on the companies' portfolios published in the calendar year 2021. This year, we are upgrading portfolio update frequency to monthly (if disclosed). Clients have full access to the climate hazard, -exposure, and -vulnerability numbers per region and asset. It becomes clear that the mild climates on the islands of Ireland and the UK are well protected from many climate risks, particularly rises in temperature and drought. Changes in tropical nights and heat wave days are also quite manageable in the UK and Ireland. The above hazards are averages of 18 climate risk hazards. Below we quantify some of these climate risk sub-hazards by European regions.

Regional climate risk hazard differences quantified

The table below highlights the 18 climate risk hazards that are part of the analyses. We will focus here on fluvial hazards, droughts and changes in mean temperature.

Climate Risk Hazards in the European analyses
Coastal hazard	Projected change in heavy precipitation days (RCP 8.5)
Drought hazard	Projected change in ice days (RCP 8.5)
Fluvial hazard	Projected change in mean temperature (RCP 8.5)
Landslide hazard	Projected change in maximum temperature (RCP 8.5)
Wildfire hazard	Projected change in minimum temperature (RCP 8.5)
Projected change in consecutive wet days (RCP 8.5)	Projected change in total wet-day precipitation (RCP 8.5)
Projected change in consecutive dry days (RCP 8.5)	Projected change in summer days (RCP 8.5)
Projected change in frost days (RCP 8.5)	Projected change in tropical nights (RCP 8.5)
Projected change in heat wave days (RCP 8.5)	Projected change in very heavy precipitation days (RCP 8.5)

Source: KR&A 2022, based on RESIN & RCP 8.5

Mean temperature rises in European regions

The climate risk hazard numbers differ strongly per region. The table below shows the twenty NUTs3 regions with the lowest mean temperature rises. The Irish and UK regions score well as the ocean lowers the impact of global warming on coastal regions. The Island of Lanzarote (Spain, Canaries) also benefits from this effect.

Region	Country	Urban/ Rural	Coastal	Ports	Average Hazard (KR&A score)	Projected change in mean temperature ('C)
Eilean Siar (W. Isles)	UK	rural	Y	Y	4.5	1.1
Border	Ireland	rural	Y	Y	4.6	1.2
Mid-West	Ireland	rural	Y	Y	4.4	1.2
South-West (IE)	Ireland	rural	Y	Y	4.6	1.2
West	Ireland	rural	Y	Y	4.5	1.2
Belfast	UK	urban	Y	Y	4.3	1.3
Blackpool	UK	urban	Y	N	4.4	1.3
Cornwall and Isles of Scilly	UK	intermediate	Y	Y	4.4	1.3
Dublin	Ireland	urban	Y	Y	4.6	1.3
East Ayrshire and North Ayrshire mainland	UK	intermediate	Y	Y	4.8	1.3
Gwynedd	UK	rural	Y	Y	4.3	1.3
Inverclyde, East Renfreshire and Renfrewshire	UK	urban	Y	Y	4.6	1.3
Isle of Anglesey	UK	rural	Y	Y	4.3	1.3
Lanzarote	Spain	intermediate	Y	Y	4.0	1.3
Lochaber, Skye & Lochalsh, Arran & Cumbrae etc.	UK	rural	Y	Y	4.5	1.3
Mid-East	Ireland	intermediate	Y	Y	4.7	1.3
Midland	Ireland	rural	N	N	4.2	1.3
Orkney Islands	UK	rural	Y	Y	4.4	1.3
Plymouth	UK	urban	Y	Y	4.2	1.3
Sefton	UK	urban	Y	Y	4.4	1.3

Source: KR&A 2022, based on RESIN & RCP 8.5 The hardest hit areas in Europe, as measured by the average mean rise in temperature with Pathway 8.5, can be found in Finland and northern Sweden and Norway, with temperature rises of circa three degrees Celsius.

Ranking drought hazards in Europe

The table below highlights the top twenty areas in Europe with the lowest drought risk. It is measured as a percentage deviation from the Standardized Precipitation-Evapotranspiration Index (SPEI), which reflects meteorological drought. Areas where drought is unlikely to occur are spread over Northern and Southern Europe. They have no strong correlation for coastal proximity.

Region	Country	Urban/ Rural	Coastal	Ports	Average Hazard (KR&A score)	Drought Hazard (% SPEI deviation)
Finnmark	Norway	rural	Y		4.0	20.9
Terras de Trás-os-Montes	Portugal	rural	N	N	3.4	20.1
Jönköpings län	Sweden	intermediate	N	N	4.2	20.0
Shetland Islands	UK	rural	Y	Y	4.5	19.9
Halle (Saale), Kreisfreie Stadt	Germany	intermediate	N	N	3.6	18.8
Københavns omegn	Denmark	urban	Y	Y	4.4	18.7
Østsjælland	Denmark	intermediate	Y	Y	4.5	18.7
Saalekreis	Germany	intermediate	N	N	3.8	18.6
A Coruña	Spain	intermediate	Y	Y	4.6	18.6
Dessau-Roßlau, Kreisfreie Stadt	Germany	intermediate	N	N	3.9	18.4
Ourense	Spain	rural	N	N	3.7	18.3
Nordsjælland	Denmark	intermediate	Y	Y	4.5	18.2
Anhalt-Bitterfeld	Germany	intermediate	N	N	3.9	18.1
Burgenlandkreis (DE)	Germany	rural	N	N	3.8	18.1
Troms	Norway	rural	Y		3.3	17.9
Lääne-Eesti	Estonia	rural	Y	Y	4.0	17.5
Lüchow-Dannenberg	Germany	rural	N	N	4.0	17.4
Arr. Thuin	Belgium	intermediate	N	N	4.2	17.4
Pohjanmaa	Finland	rural	Y	Y	3.9	17.3
Zamora	Spain	rural	N	N	3.7	17.2

Source: KR&A 2022, based on RESIN & RCP 8.5 The highest drought scores for pathway 8.5 can be found in Italy (Viterbo, Roma, Carbonia-Iglesias, Grosseto), the Czech and Slovak (Bratislava) republics, Austria (Weinviertel! and Wien), and Greece.

Fluvial hazards in Europe

The table below shows the NUTs3 regions with the highest fluvial hazards. This indicator shows the percentage of the total area of the NUTS3 area prone to flooding in the event of a 1 in 100-year fluvial flood.

Region	Country	Urban/ Rural	Coastal	Ports	Average Hazard (KR&A score)	Fluvial flooding Hazard (% of surface)
Zuidwest-Gelderland	Netherlands	intermediate	N	Y	3.9	191
Zuidoost-Zuid-Holland	Netherlands	urban	N	Y	3.9	171
Oost-Zuid-Holland	Netherlands	urban	Y	Y	3.9	159
Arnhem/Nijmegen	Netherlands	urban	N	Y	3.9	126
Delft en Westland	Netherlands	urban	Y	N	3.9	116
Miasto Wroclaw	Poland	urban	N	N	3.4	108
Agglomeratie 's-Gravenhage	Netherlands	urban	Y	Y	4.1	98
Groot-Rijnmond	Netherlands	urban	Y	Y	4.2	98
Rovigo	Italy	rural	Y	Y	2.8	80
Miasto Szczecin	Poland	intermediate	Y	Y	3.5	66
Noordoost-Noord-Brabant	Netherlands	intermediate	N	Y	3.9	64
Midden-Noord-Brabant	Netherlands	urban	N	Y	3.9	57
Miasto Kraków	Poland	urban	N	N	3.2	54
Noord-Overijssel	Netherlands	intermediate	N	Y	4.2	52
Jász-Nagykun-Szolnok	Hungary	intermediate	N	N	3.1	48
Ferrara	Italy	intermediate	Y	Y	2.8	48
Brandenburg an der Havel, Kreisfreie Stadt	Germany	intermediate	N	N	3.8	47
Utrecht	Netherlands	urban	N	Y	4.2	46
Ingolstadt, Kreisfreie Stadt	Germany	intermediate	N	N	3.4	45
Bremen, Kreisfreie Stadt	Germany	urban	Y	Y	4.5	45

Source: KR&A 2022

Dutch at pole position for fluvial flooding

Many commentators will find the Dutch position in the below table entertaining. Seven of the ten most vulnerable NUTs3 regions for fluvial flooding risk are in the Netherlands. This does not even consider coastal flooding. The current water management systems in place may not have been taken into account when these numbers were calculated or extrapolated from past events. In Poland, Wroclaw, Szczecin, and Krakow and in Italy, Rovigo and Ferrara look vulnerable.