Climate Change Is Creating Property Investment Opportunities In These 3 Markets

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Climate change is causing climate migration.

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And climate migration is creating an opportunity for global property investors.

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It used to be that Northern California’s long and frustrating rainy season began in October and continued through April with little sun in between. The summers were hot but pleasant.

Today, winter days in Sacramento are often bright with plenty of sunshine. This has led to unprecedented droughts and water rationing in some areas. Summers are marked by forest fires which burn well during the rainy season.

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As a result, California’s population is declining as people choose to leave the state. Property demand is falling in California… and is increasing in places like Crossville, Tennessee, a city that’s a favorite of fleeing Californians.

Similar climate migrations are beginning around the world. As an investor, you may do well to target the places people are looking for and perhaps avoid the places they are coming from.

Assessing Climate Impact on the Overseas Property Market

To identify the market opportunity being created by climate migration, the potential impact of projected climate changes (this is a market’s “vulnerability”) and how well the market is prepared to handle and adapt to those changes (“competing capability”).

In the “vulnerabilities” category, consider these factors:

  • Extreme weather exposure (such as hurricanes, tornadoes or extreme heat)
  • Risk of wet weather (violent thunderstorms or rain that infrastructure can handle)
  • Drought, especially in areas that sustained agriculture
  • Sea level rise and associated coastal flooding

In particular, evaluate the impacts of these criteria on agriculture and tourism.

In the “combat ability” category, here are items to consider:

  • To the extent required, does the country have enough money or borrowing power to build major fortifications for its infrastructure?
  • If so, do they have the political will to make the necessary expenditure?
  • Do they have natural resources to work with, or must they be imported?

As for combat capability, it’s mostly a matter of money. As a result, generally, rich countries are a better choice than poor ones.

On the other hand, some poor countries (or parts of poor countries) will score well in the vulnerability category and may not need much coping ability.

Most rating agencies are assigning climate-readiness scores based on a country’s climate initiatives—things like the implementation of renewable energy sources, carbon emissions targets, electric cars and fossil fuel reduction. Such a rating is of little use to a foreign asset investor.

More important is whether a country has the financial and technological means to reduce the climate impact that the country is likely to see. As an investor, you want to know if the country will be explored as other countries face the challenge.

Top three climate impact opportunities

#1 Portugal

Portugal has for years been recognized as the world’s top retirement haven, thanks to its excellent weather and affordable cost of living. Its property market has enjoyed a growing demand for the past decade. Now Portugal also deserves attention as one of the best places in the world during a changing climate.

The adverse impact of climate change on Portugal’s GDP will be minimal. This will happen in the least affected countries of the world. Importantly, it has a high level of preparedness to deal with the effects of climate change.

One of Portugal’s main weaknesses is drought. Minimize that risk by shopping along the coast north of Lisbon, where rainfall is plentiful.

One reason for Portugal’s high ranking is that it is significantly less dependent on East Asia – which is highly affected by climate change – than much of Europe. Likewise, it is less dependent on the United States than anywhere else in Europe. The country relies little on imports and is relatively independent economically with a trade sector that is better diversified than the larger economies of Europe.

Overall, Portugal is nimble and adaptable.

#2 Eastern Canada

Even under the worst of conditions, Canada is one of the most resilient places in the world to climate change.

Canada is vulnerable to sea level rise. Storm surge and river flooding pose significant risks and will result in the loss of substantial productive land. However, the country is only marginally affected in every other category of risk. Canada’s agriculture and tourism industries could also benefit from a slight increase in temperature.

And Canada is fully prepared to deal with any climate change impact.

Canada’s weather and immigration policies keep it off lists of “the world’s best places to retire overseas”. However, investors should not overlook the emerging opportunities here. Canada could be a big climate migration winner.

#3 Northern Spain

At the top of Spain’s list of strengths is its ability to manage sea level rise and its health system. On the other hand, its greatest natural threat is from floods, and its tourism industry will be adversely affected by climate migration.

Investors should focus further north, in the provinces bordering the North Coast, which offer good options for both city and rural purchases.

This part of Spain stands as a safe haven. It is free from major natural disasters, has an adequate water supply, and is less prone to wildfires. The basis of agriculture is solid.

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