Climate change is a reality. Extreme climate events – heatwaves, flooding, storms and droughts – are increasing in both severity and occurrence.

No longer confined to the realm of academic discussions or distant headlines, the impacts of climate change are seeping into the very fabric of real estate, demanding attention, adaptation, and action.

Targets to keep global temperatures within the critical 1.5°C threshold in line with the Paris Agreement are almost certain to be missed, and temperature rises are already baked in. Mean global temperatures have risen by 1°C in the past two decades, while 2023 turned into the hottest year on record and 2024 is likely to be even warmer.

Considering these trends, a recent survey of climate scientists by the Intergovernmental Panel on Climate Change (IPCC) found 77% foresee at least 2.5°C of global heating above pre-industrial levels this century if radical action is not taken.

Governments, owners and occupiers must make the built environment resilient to climate change, in tandem with decarbonization efforts.

Imagine a world where all buildings have to comply with strict ESG standards and climate adaptation becomes a necessity.

How could an existing building be retrofitted to be more sustainable and resilient? Our creative team has helped us visualize the opportunities.

In addition to the roof-top garden, electric car charging stations and cycle lanes, behind it are less-obvious changes, such as smart glass; passive design solutions for improved light and ventilation; key infrastructure moved to higher floors; heat pumps; and integrated building technology.

Around the world, cities will have to prepare and adapt to climate change in different ways.

Permeable pavements to reduce the risk of flooding, misting stations to help residents cope with more frequent and intense heat waves, buried power lines and reinforced foundations to mitigate storm damage are just some of the solutions that can make cities more resilient.

Extreme climate events are already affecting asset pricing and liquidity. Prices typically decline after climate events, particularly in locations not used to extreme weather. Overtime, repeated events can lead to significant price discounts and a drop in demand. In Hong Kong, for example, following a typhoon in October 2018, a multifamily residential building saw unit prices fall by 14% and not recover to pre-typhoon levels still four years later.

Even today’s prime buildings will need to adapt to a rapidly changing climate to maintain their appeal. More than 90% of the world’s largest companies will have at least one real estate asset financially exposed to climate risks by the 2050s, according to S&P Global.