Investors are having to mitigate numerous risks of value erosion should assets fail to meet ESG regulations. Environmental factors are also playing a part in new asset investment decisions with widespread considerations to do with energy consumption, well-being, and now one of the latest - “urban heat”.
Paul Tostevin, director of World Research at Savills, said: ‘Owners of real estate assets face two specific heat risks: transitional risk; ensuring assets can be adapted to manage climate change and energy use aligns with future legislation, and physical risk; excessive heat can physically damage building materials, so a higher level of structural resilience is required. Ignoring either may lead to reduced values, and at worst, stranded assets.’
Savills produces a City Heat Resilience Index that assesses 30 global cities based on their risk of extreme heat and resilience to it.
The Index takes into account a city’s record temperature high, the difference between that and its average summer high, and the numbers of days it experienced temperatures over 30°C in 2023. It sets that against the city’s Savills Resilient Cities ESG score, which tracks a city’s environmental practices, social policies and governance.
Higher-scoring cities should be better prepared to deal with the physical risks of extreme heat and the impact on their inhabitants.
The results can be seen below in a ranking.
Helsinki, Copenhagen and Stockholm have taken the top three spots as those best prepared to deal with extreme urban heat. Here, extreme temperatures and days over 30°C (86°F) are rare, while progressive policy around ESG helps to mitigate the effects of extreme weather on their populations.
Tostevin added: ‘Cities are taking action by appointing heat officers, redesigning public realms, greening urban areas and promoting energy efficient building codes but there’s more to do. Excessive heat exacerbates air pollution, brings greater risk of wildfire, and heightens the risk of flooding, undermining the attrac-tiveness of a city to live, work and play, and as a place for investment and business expansion.’
Chris Cummings, director at Savills Earth, a special unit at the property services firm, said especially at large regeneration schemes, the densification of new-builds could intensify urban heat.
The solution, he said, lies in providing a mix of different building heights and permeability in the ‘streetscape’.
‘Urban heat should be considered by authorities when planning large regeneration schemes, especially where they involve densifying as this can intensify urban heat, and it is existing local communities that may be impacted most.’
He added: ‘Higher land values facing parks and water bodies often result in a concentration of taller build-ings. This can form a “wall” effect, hindering the dissipation of cooler air deeper into the urban environment. The solution lies in having a mix of building heights and permeability in the streetscape.'
Savills Heat Resilience Index 2024, top 20 cities most resilient to extreme heat:
Top 10:
1 Helsinki
2 Copenhagen
3 Stockholm
4 Tokyo
5 Amsterdam
6 Mexico City
7 Toronto
8 Berlin
9 Boston
10 Hong Kong
11-20:
11 Seoul
12 Madrid
13 London
14 New York
15 Milan
16 San Francisco
17 Sydney
18 Chicago
19 Singapore
20 Johannesburg
Source: Savills Research
