Climate Change and Real Estate Opportunity: The New Habitats of Future

Author: Sajid Idrisi

This article explores how few land areas on Earth could become fit to live and expensive with time due to rising Climate Change impacts

Real Estate sector generally bet on future projected returns on investment. The demand for housing, offices, public utilities and other infrastructure is ever rising with people moving from rural areas to cities for jobs and livelihoods.??

Villages closer to major cities are turning into towns and peri-urban settlements, and towns into cities. Investors keep close eye on what kind of infrastructural developments could give them multiple returns.??

While the current development patterns would not change anytime soon, but have you ever thought that climate change with many current and future catastrophic predicted events would offer a real estate opportunity???

Yes, as climate change continues to unfold, certain land areas may undergo transformations that make them more suitable for habitation and consequently more expensive.

Disastrous events in recent years have also pushed the real estate developers to do climatic risk assessments and valuation due to huge losses incurred by hurricanes, tornados, floods, wildfires etc. Such risk profiling has also led to preference of more suitable lands, properties and climate resilient architecture/designs.

Following regions/geographic locations could see surge in real estate investments:

Coastal areas: As sea levels rise, coastal regions may become more vulnerable to flooding and erosion. However, some elevated coastal areas could become prime real estate due to their resilience to flooding and their scenic views. Some examples are Big Sur, California, USA; Amalfi Coast, Italy; Cape Town, South Africa; Santorini, Greece; and Sydney, Australia, Hokkaido and Tohoku, Japan.

During a recent visit to Japan (October, 2023) for leadership programme (IATSS Forum), I got the opportunity to visit some eastern coastal areas of Tohoku (Iwate Prefecture and Miyagi Prefecture) and Toba region - hit by earthquake driven Tsunami events. As a part of post disaster recovery planning, the houses and businesses are gradually being shifted to upland areas in consultation with people and depending on available land options. Immediate shoreline areas are being developed into Tsunami memorials parks, with high seawalls and flood resilient spongey designs.

Northern regions: As temperatures rise, previously inhospitable northern regions may become more habitable. This could lead to increased development and investment in areas such as northern Canada, Scandinavia, and Siberia.?One of these areas, I came across during my research is located 90 miles north of Arctic Circle in Russia - known as Vorkuta. Once a popular coal mining sites in USSR and with tag of being one of the coldest area on the continent (cloaking around -52 Degree Celsius), Vorkuta today is counted among the ghost towns with derelict apartment blocks and rarely visible humans. After the collapse of the U.S.S.R., the mines were privatized, and later shut down within few years - leaving Vorkuta in dark fate. Such previously areas with very inhospitable conditions today, may turn into towns of high real estate value in the future due to constantly rising temperatures and urbanization.

Himalayan regions: As temperatures increase, mountainous regions of Himalayas are becoming very attractive due to their cooler climates and access to freshwater resources. This is leading to increased demand for properties in all over Himalayas and other collateral developmental works leading to gradual degradation of mountain ecosystems.

Arid Regions: Climate change may alter precipitation patterns, leading to changes in the availability of water resources. Some arid regions could become more suitable for habitation if they receive more rainfall or have improved access to water through technological advancements. Some Examples:??

• Sahara Desert: The Sahara Desert, known for its aridity, has been experiencing changes in precipitation patterns. Some studies suggest that parts of the Sahara could receive more rainfall in the future due to climate change. This could potentially make certain regions more suitable for habitation or agriculture with proper water management strategies.?
• Australian Outback: Australia, particularly its arid and semi-arid regions, may experience altered precipitation patterns due to climate change. While some areas might become drier, others could receive more rainfall. Improved access to water through technologies like desalination, rainwater harvesting, and water recycling could make previously uninhabitable areas more viable for settlement or agriculture.?
• Southwestern United States: The southwestern United States, including states like Arizona, New Mexico, and parts of California, is prone to water scarcity issues. However, changes in precipitation patterns due to climate change could potentially bring more rainfall to these regions. This could be coupled with advancements in water management technologies, such as drip irrigation and water-efficient crops, to make arid areas more suitable for habitation and agriculture.?
• Northern China: China's northern regions, including parts of Inner Mongolia and Shanxi province, are typically dry and prone to desertification. However, climate change could alter precipitation patterns in these areas, potentially bringing more rainfall. Coupled with investments in water infrastructure and conservation measures, such as afforestation and soil conservation, these regions could become more habitable and suitable for agriculture.??
• Middle East: Countries in the Middle East, such as Saudi Arabia and the United Arab Emirates, are already facing water scarcity challenges due to their arid climate. However, advancements in desalination technology and wastewater recycling have allowed some of these countries to mitigate water scarcity issues and even reclaim desert areas for agricultural purposes. Continued innovation in water management technologies could further enhance the suitability of arid regions for habitation and cultivation.??

?Moreover, few Middle Eastern countries have experienced some unprecedented rainfall events in recent years, which have had significant impacts on the region’s infrastructure, landscape and ecology. These events include Flash Floods in UAE Floods (2020), Saudi Arabia (2022), and Iran (2022, 2023). Such constant events could increase water availability and soil moisture for agriculture and thus habitation.??

Urban areas with resilient infrastructure: Cities that invest in resilient infrastructure to adapt to climate change impacts, such as improved drainage systems and green spaces to mitigate heat islands, may become more desirable places to live and consequently more expensive. Nature based solutions are being tested worldwide to prepare cities combat extreme weather events. Here is one such Article by Ramboll which throws light on this.

Few examples of such cities are given below:??

• Copenhagen, Denmark: Copenhagen is renowned for its commitment to sustainability and climate adaptation. The city has invested heavily in green infrastructure, including green roofs, parks, and water management systems designed to mitigate flooding and heat island effects. These efforts have not only improved the city's resilience to climate change but also enhanced its livability and attractiveness to residents and businesses. As a result, property values in Copenhagen have risen significantly in recent years.?

• Singapore: Singapore is a global leader in sustainable urban development and climate resilience. The city-state has implemented various measures, such as the widespread use of green spaces, vertical gardens, and permeable pavements to manage stormwater and reduce urban heat. These initiatives have helped to mitigate the impacts of climate change while improving the quality of life for residents. Despite its small size and high population density, Singapore remains one of the most desirable and expensive cities to live in Asia.?

• Rotterdam, Netherlands: Rotterdam is a prime example of a city that has embraced innovative approaches to climate adaptation. As a low-lying city vulnerable to flooding, Rotterdam has invested in an extensive network of water management infrastructure, including levees, storm surge barriers, and green roofs. These measures have not only reduced the city's flood risk but also enhanced its attractiveness as a place to live and do business. Property values in Rotterdam have seen steady growth as a result of these investments. For more information, go through this Article by Emily O'Donnell.

From elevated coastal regions offering scenic views and resilience to flooding, to arid landscapes receiving increased rainfall and becoming suitable for agriculture, these transformations highlight the dynamic nature of our planet in response to climate change.

However, it's essential to approach the development of these areas with caution and foresight. Sustainable planning and infrastructure investments will be crucial to ensure that the newfound habitability of these regions is not short-lived and does not come at the expense of exacerbating environmental degradation or displacing vulnerable communities.

In navigating the complexities of climate change and real estate, policymakers, urban planners, and investors must prioritize resilience, equity, and environmental sustainability to create thriving, inclusive, and resilient communities for generations to come. By embracing innovation, collaboration, and forward-thinking solutions, we can harness the opportunities presented by climate change to build a more sustainable and resilient future for all.

Disclaimer: The views expressed in the article are personal. Readers are invited to share their views and comments.

References?

Building Up Our Inland Flood Resilience, by Singapore Green Plan, Medium. Accessed on 6th March, 2024??

https://greenplan.medium.com/building-up-our-inland-flood-resilience-466253fc6cf1?

Preparing cities for extreme weather using nature. Kevin Smith, February 22, 2023. Ramboll. Accessed on 6th March 2024??

https://www.ramboll.com/lets-close-the-gap/preparing-cities-for-extreme-weather-using-nature??

Rotterdam’s visionary flood and water management infrastructure by Emily O’ Donnel. Accessed on?

https://www.dhirubhai.net/pulse/rotterdams-visionary-flood-water-management-emily-o-donnell/??

Vorkuta – Russia’s Dying City Above the Arctic Circle. Dark Tourists. September 22, 2020 https://darktourists.com/vorkuta-russias-dying-city-above-the-arctic-circle/

Floodlist.com?

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