Similarly,
European real estate: climate redraws:
Despite an increase of 37% of the climate transition risk premium. Furthermore, noted by AEW, “we remain convinced that most investors will remain engaged and will be able to achieve the objectives of decarbonization,” said Hans Vrensen. Meanwhile,
AEW. Consequently, a specialist in investment council and the management of real estate assets, today publishes its study on the risk of climate transition and its impact on the European real estate sector. Moreover, Covering 196 market segments in 20 countries. However, 5 sectors, the study examines the impact of the expected costs associated with the energy transition on the total expected yields of premium real estate.
The latest data on the rise in temperatures. Therefore, sea levels confirm that climate change is increasing due to the increase in greenhouse gas emissions (GHG). Nevertheless, Current forecasts suggest that the objective of the Paris european real estate: climate redraws Agreement, which aims to limit global warming to 1.5 ° C by 2050, could be out of the world.
The study indicates an average increase of 37% of the climate transition risk premium in Europe. reaching 26 basic points (PDB) of the annual total yields expected for the period 2025-2029 against 19 PDB in the previous study, in the 196 European markets, taking into account more detailed data and a new methodology. The study stresses that the risk of transition remains moderate compared to the total expected yields of 8.1%, which suggests that for real estate in Europe, the objectives of the Paris Agreement remain relevant. The latest AEW models incorporate renovation costs as an increase in increase. according to four expert data partners analyzing a European real estate portfolio representative of the market. From this data. the study estimates a renovation cost of 14 euros/m²/year, up compared to the european real estate: climate redraws previous AEW estimate of 12 euros/m²/year on a comparable basis.
The update of the AEW risk premium also includes a new carbon -based penalty for emissions exceeding the latest carbon reduction of carbon reduction trajectories from Carbon Risk Real Estate Monitor (CRREM). which implicitly integrate the objectives of the Paris Agreement. However, our analysis projects a constant gap above the objective throughout the period of hypothetical detention of 10 years. Logistics continues to display the highest risk of transition risk at 58 PDB. mainly due to a lower bonus value per m². The bonus of shopping centers has experienced a higher increase. reaching 26 PDB, against 19 PDB previously, and the offices increased to 19 PDB, against 12 PDB previously. With 13 PDB, the residential and the building foot store retain the lowest bonuses. Estimates specific to each city and sector may vary significantly compared to European sectoral averages. The european real estate: climate redraws building’s foot trade in Zurich remains the lowest. with less than 1 PDB, while Milan logistics records the highest risk premium at 117 pdb. The AEW approach allows specific estimates by city and sector for all 196 European market segments.
Hans Vrensen. European Research & Strategy Manager at AEW, comments: “Despite global efforts to reduce carbon emissions, climate change continues, and the zero net broadcasting of the Paris Agreement for 2050 now seem to be more and more out of reach. However. we remain convinced that most investors will remain engaged and will be able to achieve the decarbonization objectives for their European real estate assets. Our latest study uses a new methodology. update with improved data sources, to estimate the average costs for investors in order to decarbonize their portfolios. Although this has helped to revise the costs of 37%upwards. or 26 basic points per year of total yields, european real estate: climate redraws we estimate that this remains manageable and always allows investors to benefit from attractive yields adjusted to short -term risk while preserving the long -term value of their assets. It is important to note. however, that this methodology focuses solely on the risk of transition and does not take into account the costs associated with the potential physical risks linked to the climate for buildings, including extreme weather events. “
European real estate: climate redraws
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