GIC: Climate Change Could Pose $550B-Plus Real Estate Risk By 2050

The temperature is rising on CRE to insulate itself from the worst potential fallout of climate change. 

Climate change's increasingly disastrous impact could wash away up to $559B in real estate asset values worldwide over the next decade and a half, according to a new report from Singaporean sovereign wealth fund GIC.

The report, which analyzed global real estate properties held by companies in the S&P Global REIT index, said in a medium-to-high-climate-change scenario, 28% of the total real estate asset value of the index could be exposed to risk. 

“The effects of climate change are increasingly felt here and now, with a tangible impact on the real economy and the value of assets,” the authors wrote.

Climate change-related events over the past 50 years have resulted in $4.3T in reported economic losses, according to the World Meteorological Organization. Still, investors have a difficult time quantifying the financial impact of climate risks on their assets, the report says. 

The most widespread risk, impacting 89% of analyzed properties, is extreme heat, followed by drought at 67% and tropical cyclones at 38%. If asset owners proactively adapt their properties, they can mitigate some of the impacts of climate change, according to the report. 

Some adaptation strategies include green or cool roofs to adapt to extreme heat and wet or dry flood-proofing solutions to manage flooding risks. The report found that implementing these measures could reduce the cost of climate hazard risks by a net $45B by 2050, including the cost to deploy the adaptation solutions.

Companies that move to insulate themselves from climate change could net a major payday in return. GIC estimated that new roofs and flood-proofing measures could lead to a $726B revenue opportunity through 2050, or about $29B annually in a medium-to-high-warming scenario. 

Commercial real estate owners in Houston have faced the fallout of these climate scenarios firsthand this year. Over a little more than a month, a derecho with hurricane-force winds led to billions in property damage and a tropical storm knocked out power for days.

Much of the industry could be doing more to reduce emissions, an in-depth Bisnow investigation found. Of the world’s 75 largest real estate owners analyzed in 2024, 38% had no plan in place to cut emissions. 

“Timelines are being pushed back,” Urban Land Institute Europe CEO Lisette van Doorn told Bisnow earlier this year. “You’re seeing a lot of internal work being done, people working out how much they might need to spend to improve assets. But we’re not seeing a lot of action.”