Future‑Proofing Real Estate Investment

• Avoid building in high-risk areas and make climate-related risks visible in planning and investment decisions.

  a. Finding: Climate-related risks are primarily location-specific, yet they are not systematically embedded in planning or investment frameworks. Urbanisation continues to expand into hazard-prone areas. Across Europe and Central Asia, urban development between 1985 and 2020 increasingly occurred in flood zones, driven by land scarcity and weak zoning enforcement. Risk assessments remain constrained by data gaps, inconsistent methodologies and unclear regulatory requirements. Survey results highlighted the following barriers: a lack of granular property-level data (cited by 58% of respondents), unreliable methodologies (49%), insufficient hazard data (28%) and unclear reporting standards (28%).

  b. Recommendation: Governments can integrate forward-looking risk assessments into land-use planning, zoning, building codes and permitting to prevent new exposure in high-risk areas. Climate-risk disclosure at key market events, such as property sales, leases or mortgage issuance, can improve transparency. Survey results indicate that regulatory and financial tools are viewed as the most effective levers to accelerate sustainable investment, with minimum performance standards cited by 67% of respondents and financial incentives cited by 56%.

• Promote open, interoperable and localised climate-related risk data for real estate and its disclosure.

  c. Finding: Climate-related risk assessment and disclosure in real estate remain fragmented, limiting comparability and transparency. Misalignment between disclosure frameworks and inconsistent data availability constrain the integration of risk into investment decisions. In the OECD Future-proof Real Estate Investment Survey, 44% of respondents identified framework misalignment as a major barrier, while 35% cited insufficient data at appropriate scales and 35% a lack of cost-efficient methodologies.

  d. Recommendation: Governments can develop open, interoperable data ecosystems that integrate hazard information, asset characteristics and forward-looking scenarios. Harmonised definitions and data structures can improve comparability and efficiency. Public authorities can enhance transparency by referencing recognised international frameworks while maintaining flexibility for local conditions.

• Consider financial incentives that promote resilience and decarbonisation of real estate through retrofits, adaptation and protective infrastructure.

  e. Finding: Resilience is a value-driver for real estate. Physical damage to buildings from climate hazards can quickly lead to asset devaluation, loan defaults and market disruption. Insurance markets face increasing pressure from growing climate-related losses, which is challenging affordability. Long-term resilience depends on reducing vulnerability through investment in mitigation and adaptation.

  f. Recommendation: Governments can align fiscal frameworks, public investment and financial regulation with decarbonisation and resilience goals to reduce fiscal exposure and mobilise private capital. Clear policy signals and targeted incentives can direct investment toward preventive measures such as energy retrofits, adaptation projects and protective infrastructure. For households and small property owners, concessional or low-cost loans, green mortgages and pooled retrofit financing vehicles can lower the cost of capital for upgrades. For commercial property owners and institutional investors, resilience bonds, credit-enhanced structures and blended finance facilities can expand investment in adaptation and community-scale infrastructure.

• Apply and help develop international standards for measurement and reporting given the global nature of real estate finance.

  g. Finding: Climate-related risks in real estate are global, but assessment and disclosure practices remain fragmented. Investors, lenders and regulators apply different assessment strategies and assumptions, along with disclosure requirements that vary across jurisdictions. Frameworks such as Task Force on Climate-related Financial Disclosures (TCFD), International Financial Reporting Standards (IFRS) S2 and Network for Greening the Financial System (NGFS) have advanced convergence but remain unevenly implemented. Multiple rating and certification schemes further limit cross-border comparability.

  h. Recommendation: Governments can strengthen international co-ordination to improve interoperability of climate-risk disclosure and assessment. Common definitions, consistent metrics and harmonised data classifications would enhance transparency and comparability. International platforms for dialogue and knowledge exchange can also accelerate learning on adaptation practices, financial instruments and certification frameworks, supporting a more coherent global approach to resilient real estate.

Future analysis should capture climate-related risks in real estate with greater granularity and disaggregation by geography, building type and ownership structure. Establishing a global baseline on the share of real-estate assets assessed for climate-related risks would help track progress and identify gaps. Further research should also examine the roles of financial institutions such as retail banks and development finance institutions in mobilising capital, particularly in emerging and developing economies where most new building stock will be built by 2050. Strengthening partnerships among governments, financial institutions and international organisations will be essential to close data and investment gaps and ensure that future analysis is globally relevant.