Climate Change Is Creating Property Investment Opportunities In These 3 Markets

Climate change is leading to climate migration.

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

It used to be that northern California’s long and depressing rainy season started in October and continued until April with little sun in between. Summers were hot but pleasant.

Today, winter days in Sacramento are often bright with plenty of sunshine. This has led to unprecedented drought and water rationing in some areas. Summers are marked by wildfires that burn well into what used to be the rainy season.

As a result, California’s population is declining as people choose to leave the state. Property demand is falling in California… and increasing in places like Crossville, Tennessee, one town favorited by fleeing Californians.

The same kinds of climate migrations are beginning to play out worldwide. As an investor, you could do well to target the places people are seeking and perhaps avoid the places they’re coming from.

Assessing Climate Impact On A Property Market Overseas

To identify a market opportunity being created by climate migration, look both at the likely impact of predicted climate changes (this is a market’s “Vulnerability”) and at how well prepared the market is to handle and adapt to those changes (“Coping Capacity”).

In the “Vulnerability” category, consider these factors:

  • Extreme weather risk (such as hurricanes, tornados, or extreme heat)
  • Wet weather risk (violent thunderstorms or rain beyond what the infrastructure can handle)
  • Drought, especially in areas that used to sustain agriculture
  • Sea level rise and related coastal flooding

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

In the “Coping Capacity” category, here are items to consider:

  • To the extent necessary, does the country have adequate wealth or borrowing power to undertake major fortifications to its infrastructure?
  • If so, do they have the political will to spend what’s necessary?
  • Do they have the natural resources to get the job done, or must they import?

For Coping Capacity, it’s mostly a matter of money. As a result, generally, wealthy countries are better choices 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 Capacity.

Most rating agencies are assigning climate-preparedness scores based on a country’s climate initiatives—things like implementation of renewable energy sources, carbon emission goals, electric cars, and fossil fuel reduction. Ratings like this are of little use to the overseas property investor.

More important is whether a country has the financial and technological wherewithal to mitigate the climate impact that the country is likely to see. As an investor, you want to know if the country will be sought after as other countries become challenged.

Top Three Climate Impact Opportunities

#1 Portugal

Sintra, Portugal

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

The adverse impact of climate change on Portugal’s GDP will be minimal. This will be among the world’s least affected countries. As important, its level of preparedness to deal with the effects of climate change is high.

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

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

All in all, Portugal is nimble and adaptable.

#2 Eastern Canada

Bromont, Quebec, Canada Meunier

Canada is one of the world’s most resilient places for climate change, even under the worst scenarios.

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

And Canada is well prepared to cope with any climate change impact.

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

#3 Northern Spain

Bilbao, Spain

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

Investors should focus in the north, in the provinces bordering the north coast, which offers good options for both city and rural buys.

This part of Spain stands out as a safe haven. It’s free from major natural disasters, has an ample water supply, and is at low risk for forest fires. The agricultural base is solid.