Climate change creates real estate investment opportunities in these 3 markets

Climate change leads to climatic migrations.

And climate migration is creating an opportunity for global real estate investors.

In the past, Northern California’s long and depressing rainy season began in October and continued into April with little sunshine in between. The summers were hot but pleasant.

Today, winter days in Sacramento are often bright and sunny. This has led to an unprecedented drought and water rationing in some areas. Summers are marked by forest fires that burn until what was once the rainy season.

As a result, California’s population is shrinking as people choose to leave the state. Real estate demand is declining in California… and increasing in places like Crossville, Tennessee, a favorite city of escaped Californians.

The same types of climatic migrations are starting to occur all over the world. As an investor, you would do well to target the places that people are looking for and maybe avoid the places where they come from.

Evaluate the climate impact on a foreign real estate market

To identify a market opportunity created by climate migration, consider both the likely impact of predicted climate changes (this is the ‘vulnerability’ of a market) and how well prepared the market is to handle. and adapt to these changes (“Adaptability”).

In the “Vulnerability” category, consider the following factors:

  • Extreme weather hazards (such as hurricanes, tornadoes, or extreme heat)
  • Risk of wet weather (severe thunderstorms or rain beyond what infrastructure can handle)
  • Drought, especially in areas that supported agriculture
  • Sea level rise and associated coastal flooding

In particular, assess the effects of these criteria on agriculture and tourism.

In the “Adaptability” category, here are the elements to consider:

  • To the extent necessary, does the country have sufficient wealth or borrowing power to undertake major fortifications of its infrastructure?
  • If so, do they have the political will to spend what is necessary?
  • Do they have the natural resources to do the job, or do they have to import?

For Coping Capacity, it is above all a question of money. As a result, in general, rich countries are better choices than poor countries.

On the other hand, some poor countries (or parts of poor countries) will score well in the Vulnerability category and may not need a great deal of adaptive capacity.

Most rating agencies assign climate readiness scores based on a country’s climate initiatives, such as implementing renewable energy sources, carbon emissions targets, electric cars, and reducing fuel costs. fossil fuels. Such appraisals are of little use to the overseas property investor.

Most important is whether a country has the financial and technological means to mitigate the climate impact that the country is likely to see. As an investor, you want to know if the country will be researched as other countries are challenged.

The three main opportunities for climate impact

# 1 Portugal

Portugal has been recognized as the best retirement haven in the world for years thanks to its excellent climate and affordable cost of living. Its real estate market has experienced increasing demand over the past decade. Today, Portugal also deserves attention as one of the best places in the world to thrive in a changing climate.

The negative impact of climate change on Portugal’s GDP will be minimal. It will be one of the least affected countries in the world. Equally important, its level of preparedness to deal with the effects of climate change is high.

One of Portugal’s main vulnerabilities is drought. Minimize this risk by shopping along the coast north of Lisbon, where rainfall is plentiful.

One of the reasons for Portugal’s high ranking is that it is significantly less dependent on East Asia, which is heavily affected by climate change, than most of the rest of Europe. Likewise, it is less dependent on the United States than elsewhere in Europe. The country depends little on imports and is relatively independent economically with a better diversified commercial sector than the major European economies.

Overall, Portugal is nimble and adaptable.

# 2 Eastern Canada

Canada is one of the most resilient places in the world to climate change, even in worst-case scenarios.

Canada is vulnerable to sea level rise. Storm surges and river flooding pose a significant risk and will result in a substantial loss of productive land. However, the country is only moderately affected in all other risk categories. Canada’s agriculture and tourism industries could even benefit from a slight increase in temperature.

And Canada is well prepared to deal with any impact of climate change.

Canada’s weather and immigration policies exclude it from lists of “the best places in the world to retire abroad.” Investors, however, shouldn’t overlook the emerging opportunity here. Canada could be a big winner from climate migration.

# 3 Northern Spain

Foremost among Spain’s strengths is its ability to cope with rising sea levels and its health system. On the other hand, its greatest natural threat comes from flooding, and its tourism industry will be negatively affected by climate migration.

Investors should focus on the north, in the provinces bordering the north coast, which offer good options for urban and rural purchases.

This part of Spain stands out as a safe haven. It is free from major natural disasters, has an abundant water supply, and has a low risk of forest fires. The agricultural base is solid.