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Abstract

This project investigates how climate risk can be systematically integrated into real estate investment strategies using the Thames Estuary 2100 (TE2100) Plan as a policy and spatial testbed. By combining asset-level climate exposure modelling with advanced econometric, spatial, and machine-learning techniques, the study assesses how current and future flood-risk scenarios influence property values, investment yields, portfolio allocation, and institutional behaviour. The research identifies evidence of climate mispricing, evaluates the protective and signalling effects of the TE2100 adaptation infrastructure, and proposes climate-adjusted valuation and investment frameworks suitable for institutional investors, REITs, and policymakers. Findings are designed to support more resilient capital deployment, inform regulatory guidance, and strengthen long-term urban and financial adaptation in the UK real estate market.

Description

This project examines how climate risk can be systematically integrated into real estate investment strategies through a detailed case study of the Thames Estuary 2100 (TE2100) Plan, one of the United Kingdom’s most significant long-term flood-risk adaptation programmes. Led by Dr Oluwaseun Ajayi (Director of Study), the research integrates climate science, real estate finance, spatial analytics, and behavioural investment modelling to understand how present and future flood-risk scenarios shape asset values, capital flows, investor behaviour, and long-term portfolio resilience.

The study combines high-resolution climate hazard data with property-level attributes, institutional transaction records, and market fundamentals to model exposure, sensitivity, and adaptive capacity across different investment geographies within the Thames Estuary corridor. Using advanced quantitative methods including Elastic Net, Random Forest, GWR, Bayesian structural time-series, and Climate Value-at-Risk (VaR) modelling, the project evaluates the extent of climate mispricing, tests the protective effect of TE2100’s planned adaptation infrastructure, and quantifies how regulatory signals influence market behaviour and pricing trajectories.

The research delivers a suite of climate-adjusted valuation tools, investment scenarios, and portfolio construction frameworks that can support institutional investors, REITs, pension funds, and local authorities in making data-driven, resilience-focused decisions. The findings also provide evidence for policy refinement, support the creation of climate-aligned appraisal standards, and demonstrate how adaptation investment can reduce long-term economic losses while improving market stability. The project contributes to national conversations around climate-resilient land use, financial regulation, environmental disclosure, and the future of real estate risk management in the UK.