Asia-Pacific REITs face high climate risk, report shows

Nearly 10 per cent of properties owned by leading Real Estate Investment Trusts (REITs) in the Asia-Pacific region are at high risk of climate change damage, particularly in coastal areas, according to a report cited by Reuters on Wednesday.

REITs, with a global market capitalisation of about $3 trillion, are typically seen as safe investments. However, climate risks such as floods and wildfires could negatively impact valuations and increase insurance premiums.

The report, by climate risk consultancy XDI, analysed over 2,000 property assets valued at $142 billion held by the 20 largest REITs in Japan, Australia, Singapore, and Hong Kong.

Properties expected to suffer annual damage exceeding 1 per cent of their total replacement value by 2050 were deemed “high risk.”

Coastal inundation was identified as the biggest threat in the Asia-Pacific region. The report calls for greater transparency and disclosure to help companies, investors, and lenders measure and manage future climate impacts.