PODCAST: The extreme weather events real estate is ignoring

As extreme weather events intensify, asset managers have raced to protect properties from the impact of flooding. Elevation strategies, surface water management systems and sophisticated flood covers are now standard across buildings at risk.

But this singular response to water-related perils is exposing a troubling issue in the industry's climate resilience strategy. That is, other weather events remain dangerously underestimated.

"We talk too much about the water side. We don't talk enough about the heat, the wind, and the cold side," warned Julian Sutherland, head of Sustainable Assets – APAC, JLL.

Some climate measures too challenging

Sutherland, who was speaking at the Transform conference in Sydney for real estate sustainability leaders, said the preference for flood mitigation reflects industry knowledge and access to tools.

“It has quite a lot of well understood solutions," he said, adding that insurance providers understand the metrics and valuers can quantify the risk reduction.

Hong Kong-based Link REIT, for example, achieved a discounted insurance premium after implementing comprehensive flood and climate adaptation measures across one of its affected assets.

However, when it comes to the impact of heat, wind and cold weather events, building adjustments can be more challenging. They might include envelope performance improvements, upgraded insulation, modified glass ratios and redesigned HVAC systems. These are all interventions that are more complex and harder to value, Sutherland notes.

Yet these climate risks are already manifesting. In 2026, Sydney experienced wildfires blanketing the CBD in smog, record rainfall and destructive wind events all within weeks of each other.

It is not a question of if these events will occur but when and how often. Projects need to build in climate resilience now and that starts with understanding the impacts and risks.

Bottom line impact

The current lopsided approach to risk management is leading to significant cost and long-term valuations implications.

Georgia Warren-Myers, head of sustainability, Strategic Value Advisory, JLL, identified that in the long-term there will be a "bifurcation in the market" between climate-adapted buildings and vulnerable properties.

Also speaking on the panel, she warned that properties addressing only partial climate exposure in adaptation measures may increasingly be exposed to rising insurance costs, damage costs and income affected by escalating exposure to events.

She noted one shopping centre that suffered a significant point discount on its pricing because its catchment area faced significant flood risk, even if not in a flood zone itself.

“Assets are being discounted for not achieving a particular expectation of the market,” she said. “Tenants are not going to stay in assets where they are continually put at risk, despite how cheap their rent might be.”

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