UK - Climate risk analysts have assessed London property's risk of flooding as 'medium' - but warned that a "major" weather event could wreak long-term economic damage not only on the capital but across the UK.

With 517,000 London properties classified by the Environment Agency as being at risk of flooding, Bill Gloyn, partner at flooding insurance specialist JLT, told a recent RICs-hosted climate change event that too little attention had been paid to flood risk because "the financial district is built on a hill".

He added: "The impact on commercial property values would be significant as tenants look elsewhere - not Birmingham and Manchester, but in Frankfurt, Paris and Hong Kong."

Professor Douglas Crawford-Brown, executive director at the Cambridge University climate change centre, pointed out that, in the wake of Hurricane Katrina, 30% of the New Orleans workforce had relocated to other states - taking industries with them.

"When you look at the size of the UK, you have to factor in that people wouldn't necessarily pack up and move - because if it hits London, it will hit Manchester and other cities people might otherwise move to," he said.

"No asset manager decides on the basis of how bad things could be - they're interested in probability.

"Asset managers care about microeconomics, but the impacts are macroeconomic. A storm half the size of Katrina could turn 10-year economic growth into a 10-year loss.

"The entire economic structure of New Orleans changed after Katrina, and it will probably never recover to its original state."

The government-sponsored Arcadia project, set up in the wake of Hurricane Katrina, assigns probabilities to multiple scenarios involving impacts on 42 sectors - including infrastructure and transport.

Peter Quarmby, regional risk manager at the Environment Agency, said developers expected ancillary infrastructure requirements to "come from elsewhere" and pointed to a "disconnect" between risks for specific projects, such as the Crossrail transport infrastructure project, and London-wide risks.

He pointed out that the primary risk in the UK would come not from Katrina-style catastrophic events but from 'medium-risk' surface water flooding, which "might do less damage than a major tidal event, but comes with a higher probability".

While Gloyn pointed to anecdotal evidence that some UK fund managers were looking to offload exposed assets, RICS president Robert Peto said he had been surprised by the lack of concern from the financial services sector.

"Canary Wharf might be 10 metres above flood-level, but how would anyone get to it?" he said.