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.
