Investment approach
Flood and climate risk in property analysis
Markets may price physical risk incompletely. A deal review needs exposure, vulnerability, insurance and liquidity.
Climate risk becomes financial when it changes cost, insurance, comfort, interruption and future demand. Research suggests pricing can be uneven or delayed.
Beltrán reviews flood-risk capitalisation. Gourevitch studies potential climate-risk underpricing. Evidence from Australia and Hurricane Sandy shows that disclosure, asset type and recent experience matter.
Physical due diligence
Map the address, then inspect floor level, basements, drainage, roof, façade, equipment and damage history. Obtain insurance conditions and exclusions. Two assets in one zone can have different vulnerability.
Integrate the issue into technical due diligence, the full budget and the investment memo. Downside cases should include repair, interruption, insurance and liquidity.
Sources
A risk map does not replace building and insurance review.
Questions and answers
Is all risk already in the price?
Not necessarily; pricing can be incomplete or delayed.
What matters beyond the map?
Physical vulnerability, history, equipment and insurance.
How does it enter the model?
Through CAPEX, interruption, insurance and liquidity scenarios.
