On March 26th, a collection of Canadian real estate leaders, convened by R-LABS, unveiled the 2024 Industry Innovation Agenda, as part of addressing urgent real estate and housing challenges. It comes in response to a report stressing the challenges facing the real estate sector and steps required to address issues with innovative approaches. R-LABS intends to allocate around $1 million towards backing early-stage startups dedicated to tackling the primary obstacles encountered by the real estate sector in 2024. It urges contributions “across the board” to spearhead efforts in confronting these challenges.
In addition to addressing pervasive housing affordability concerns, there is a call for solutions to sustainability and climate resilience challenges.
Impacts on Real Estate
In addition to environmental concerns, these climate resilience concerns have an impact on the real estate market, making this announcement of even further interest to the real estate interest.
Canadians, particularly younger generations, are increasingly aware of climate change and its repercussions. This awareness is shaping their investment decisions, employment choices, and other actions. It’s likely that they’ll favour commercial real estate entities, properties, and investment portfolios that demonstrate a commitment to climate action over those that do not. As many as 60 percent of young homeowners considered the possible effects of climate change when purchasing their residential property.
As a result, some organizations, like Local Logic and Climate Check, are starting to provide climate risk data for real estate properties in the US and Canada.
While some areas of higher risk may face negative impacts in their real estate markets, cities that embrace sustainability may see a rise in popularity, and individual properties with sustainable features will have increased value.
A report from the Intact Centre on Climate Adaptation, University of Waterloo, indicated that, over the past eight years, catastrophic flooding in communities resulted in an average 8.2% reduction in the final sale price of houses, 44.3% reduction in the number of houses listed for sale, and 19.8% more days on market to sell a house. The study focused on five Canadian cities, each of which experienced catastrophic flooding between 2009 and 2020.
It also indicates that climate change could reduce the value of homes in Canada by as much as 15% by 2050.
The US commercial real estate sector has already felt the financial repercussions of severe weather events, offering insights into potential impacts for Canada’s commercial real estate market. For example, properties affected by Hurricane Sandy saw a sharp decline in value, ranging from 17% to 22%, while housing prices within New York’s flood zones experienced an 8% decrease by 2017, largely due to heightened risk perceptions among potential buyers.
A study by RICS revealed that the frequency of floods could affect property values due to issues like restricted physical access, disruptions to business operations for tenants, and the long-term effects of rising temperatures. With approximately half a million buildings in Canada at risk of flooding, many of which aren’t accounted for in government flood maps, there’s a pressing need for infrastructure owners and investors to assess and manage both current and future climate-related risks.
Fires and flooding are identified as the primary physical risks in Canada, with fires now ranking among the country’s top hazards. Despite this, flooding remains a significant threat, responsible for 40% of weather-related disasters since 1970.
Resilient Cities
The good news is that CBRE’s North American City Sustainability Study places Montreal, Ottawa, Toronto, and Winnipeg in their Top 10 Most Resilient Cities. This recognition stems from their pledge to achieve net zero carbon or greenhouse gas emissions by 2050, along with their increased adoption of renewable energy in the last five years.
As part of its response to Canada’s ongoing housing challenges, the federal government has added another 12 new properties to the Canada Public Land Bank,...
As part of its response to Canada’s ongoing housing challenges, the federal government has added another 12 new properties to the Canada Public Land Bank,...
