How can asset managers accelerate real estate adaptation?
Author: Anaïs LORAND 
As climate change continues to accelerate, extreme weather events, such as wildfires, floods, extreme heat… are increasingly impacting real estate assets, especially by endangering their structural integrity. Although these impacts differ greatly within and between regions, assets’ vulnerability is expected to grow, as disturbances to environmental processes are becoming more intense and frequent.
Why does adaptation matter to real estate asset managers?
Beyond leading to structural damage – ranging from cracks in foundations and walls to the complete collapse of buildings – extreme weather events bring serious financial and security risks to real estate stakeholders:
- Increased CAPEX and OPEX
Costs of repair, retrofitting, maintenance, and insurance are expected to increase as building assets become more vulnerable to climate change. - Decreased revenues
Real estate properties may become less attractive in areas prone to extreme events, potentially stranding assets or causing rental yields to decrease. - Increased security risks for real estate stakeholders
Real estate assets must be protected, investments secured, and stakeholder security ensured. As climate change impacts overall security, and with public finance tools becoming more limited, asset management firms will increasingly be called upon to support investments in real estate adaptation and provide the necessary financial services to address these growing challenges.
What key adaptation measures can real estate asset managers implement?
At Altitude, we’ve combined science-based analysis with in-depth insights into climate-related risks. Based on our findings, we’ve identified several key measures to adapt and reduce risks to asset managers’ portfolios, though this is not an exhaustive list.
Preventive adaptation measures:
- Climate risk assessment
A thorough climate risk assessment allows for the evaluation of local temperature patterns and the likelihood of extreme events. These assessments help identify how long-term risks affect real estate assets, enabling the development of tailored adaptation strategies across portfolios. - Monitoring local regulations
Ongoing changes in local building codes, safety standards, and environmental policies require close monitoring. Engagement with local authorities helps ensure that adaptation strategies are aligned with evolving regulatory contexts at the local level. - Conditioning financial services on adaptation efforts
The alignment of financial services with beneficiaries’ adaptation efforts and willingness to engage acts as a lever to reduce both physical and financial risks. Conditioning access to services on the adoption of best practices contributes to more resilient investment outcomes. - Investing in Nature-Based Solutions
Nature-Based Solutions (NBS) – such as landscaping and urban green interventions – provide long-term protection against extreme events like drought, subsidence, wildfires… Integrating NBS into asset management practices supports environmental protection and strengthens resilience at the asset level.
Physical risks screening PDF report, exported from Altitude.
Resilience adaptation measures:
- Insurance coverage, where appropriate, provides a financial buffer against the impacts of extreme weather events.
- Retrofitting real estate assets increases their ability to withstand climate-related hazards. Regular maintenance and upgrades to building design and insulation – based on climate risk assessments – strengthen asset durability through measures like weatherproofing.
- Energy and water management strategies – such as the use of reflective surfaces, green infrastructure, optimized energy contracts, and water-efficient equipment – help control operational costs and reduce environmental impact.
- Safety protocols and up-to-date emergency procedures are essential for ensuring the safety of real estate stakeholders. Outdoor work guidelines must be prepared in line with changing weather patterns.
Adaptation: a strategic opportunity for real estate asset manager?
Adaptation is not just about protecting assets; it is also about positioning portfolios for long-term growth. Real estate asset managers face growing pressure as policies and regulations tighten, market expectations shift, and societal demands intensify. This creates a need for increased investment in making existing buildings more sustainable. Adaptation addresses these challenges while also opening up new opportunities, as real estate resilient to climate risks becomes more valuable and appealing to investors and stakeholders who are increasingly prioritizing sustainability. Adaptation presents a complex challenge for the private equity sector. To gain a deeper understanding, refer to our White Paper by AXA Climate, crafted specifically for investors and corporates, offering key insights on effectively navigating the adaptation process. The full paper is available for download here.
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