WINNING IN GROWTH CITIES 2019/2020 - A Cushman & Wakefield Global Capital Markets Report - Cushman & Wakefield Colombia
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WINNING IN
GROWTH CITIES
2019/2020
A Cushman & Wakefield
Global Capital Markets Report
CONTENTS
01
MARKET
02 03
YEAR IN CLIMATE CHANGE
OVERVIEW REVIEW & GLOBAL CITIES
P. 02 P. 05 P. 12
04 05
STRATEGY APPENDIX
FOR 2019/20 P. 43
P. 33
01 WINNING IN GROWTH CITIES
01 02 03 04 05
MARKET
01 OVERVIEW
Global investment fell 0.7% last Muted economic growth and ongoing headwinds
mean the growth side of the equation will remain
year but demand remains at in doubt in the months ahead, but it also means
quantitative easing and negative interest rates are
record levels, with domestic and back on the agenda. As a result, investors have a
regional investors, rather than more certain environment in which to plan – and
one with which they have become very familiar.
global players, driving activity. The recovery in US activity in Q2 is an indicator
of how markets can respond once interest rate
uncertainty is reduced.
Whilst demand is strong, high pricing and stock
shortages have held back activity, with investors On pricing, yield compression had appeared to be
by and large unwilling to embrace riskier markets ending in most markets in Q1 but with bond yields
or push up pricing, given the uncertain interest rate down heavily, downward pressure will be returning
and growth environment. to yields in the leading and most liquid markets.
However, further yield falls will be selective.
As a result, the biggest cities have been most
in-demand, with their market share increasing in Hence, the question for what differentiates markets
all regions. By sector, investors have continued to going forward will be less about growth – that will
spread their net more widely, with residential the be down – and more about relative financing costs,
strongest area of growth last year. the timing and direction of structural market shifts
and, as ever, finding stock in a global market with
Geopolitical risks from the UK to Hong Kong, relatively limited distress.
Brazil and the Middle East are on most investors
minds and can be cited as factors slowing the
market, but most countries have struggled to match
their performance from the previous year and the
easing in the market is widespread.
New York remains out in front as the largest
real estate market in the world, followed by
Los Angeles, San Francisco and London, with Paris
fifth globally.
Among international buyers, London is again the
market to beat, with Brexit considered by many, INVESTORS HAVE CONTINUED
to be a tactical issue with respect to timing and TO SPREAD THEIR NET MORE WIDELY,
price, rather than a structural hit to its appeal. WITH RESIDENTIAL THE STRONGEST
New York came back strongly to regain second AREA OF GROWTH LAST YEAR
place amidst increased competition from a range
of cities such as Paris, Madrid and Sydney.
CUSHMANWAKEFIELD.COM 02
STRATEGY IN THE YEAR AHEAD
Strategy needs to evolve in the face of the changes in the market, with a focus on
sustainable income but also on targeting appropriate returns, given the varying risk and
liquidity of different asset pools. The key themes behind that evolution in 2020 will be:
ECONOMY DOWN UNDERSTAND
1 2
BUT NOT OUT THE OCCUPIER
The economic backdrop will be muted and volatile Structural changes continue to impact in all
in 2020 with the biggest risk likely to be trade sectors, meaning occupiers are frequently in the
wars. However, slower economic growth suggests wrong place and the wrong space, hence there
slower rather than negative property performance are latent gains to be extracted by providing the
and with credit conditions set to remain loose, right solutions. Developing and integrating new
the cycle has further to run. That of course is an technology will be an ongoing focus for businesses
average – and there will be both areas of gain and and while investors need to guard against the end
areas of loss which investors need to look through, of the cycle, they must also be aligned with the
diversify and follow longer‑term and local trends structural shifts impacting users, recognising these
where possible. as both an opportunity and a threat to levels of
demand and affordability, as well as the hierarchy
of cities themselves.
SECTOR CLIMATE
3 4
AGNOSTIC CHANGE IS HERE
As occupier needs change, distinctions between Occupiers are leading in driving changes in
sectors are blurring and mixed-use is becoming property demand as a function of climate change
ever more important to provide flexibility and and investors must take note. While linked to
drive growth. One investor’s ‘alternative’ may sustainability, the two shouldn’t be confused.
be mainstream for another, but new sectors Climate change needs its own distinct response
in general are clearly in fashion and hence carry from investors to include an appreciation of the
some risk of becoming overpriced given the locations at risk (both physically and in human
shortage of opportunity that frequently exists. terms), and the contributions the asset can make
Nonetheless, the fundamentals are strong, in terms to reducing global risks. Winners and losers will
of the upside for creating a platform of scale, be seen along the way, with northern cities in the
the positive gains to portfolio performance, and the Nordics and Canada perhaps having most to gain
imperative to embrace a wider mix of uses to make if current predictions are right. However, having the
property work. governance and infrastructure to cope will be key
as will potential changes brought about through
altered migration patterns.
LONG TERM MARKET
5
LIQUIDITY TO STAY All in all therefore, we face a market with a
broadening range of opportunities by region
Demographic changes will maintain high savings and a growing need for investors to diversify
rates and with interest rates staying low, this will to both gain exposure to the right cities and
keep up institutional demand for stable long-term also reduce risk. The winning markets of
incomes – and keep core yields down. 2020 will remain focussed on the biggest and
best across gateway and challenger cities, but
increasingly will be those that have the right
mix of strong innovative governance on the one
hand and appeal to talent on the other.
03 WINNING IN GROWTH CITIES
01 02 03 04 05
KEY THEMES FOR INVESTMENT IN THE YEAR AHEAD
CORE CORE-PLUS TO OPPORTUNISTIC
VALUE‑ADD
THEME
THEME THEME
Urban Logistics
UK Development
WHERE?
WHERE? WHERE?
Global Gateways
London Gateways, global
WHY?
WHY? WHY?
Structural change driving
Attractive pricing and Meeting office and
demand and densification
post-Brexit bounce multifamily supply
shortfalls in CBDs
THEME
THEME
US Sunbelt
China THEME
WHERE? Debt
WHERE?
Office, logistics,
Beijing, Guangzhou & WHERE?
residential
Chengdu plus Shanghai Global
WHY? and Shenzhen
WHY?
Demographic growth
WHY? Existing debt can offer
and quality of life
Attractive mix of growth, attractive pricing and a
pricing and supply for the route to control stock via
THEME
short to medium term a loan to own route
Late-cycle offices
WHERE? THEME THEME
Berlin, Munich, Mixed use Platform acquisitions
Singapore, tier 2 US
WHERE? WHERE?
WHY? Gateways: repositioning Global
Low vacancy,
WHY? WHY?
sustained demand
Driving performance Driving performance
in “supply through management
THEME
constrained markets”
“No cycle” sectors
THEME
WHERE? THEME Emerging markets
“Living” sectors, global Retail
WHERE?
WHY? WHERE? India, Vietnam, Mexico,
Diversification, Global Gateways Peru, Brazil, Colombia
demographic growth,
WHY? WHY?
income resilience
Attractive pricing Short- and medium-term
due to distress but potential emerging as
THEME
signs emerging of occupier needs mature
Lending
long‑term potential
WHERE?
US and Europe
WHY?
Diversification, yield,
downside protection
CUSHMANWAKEFIELD.COM 04
YEAR
02 IN REVIEW
Global real estate investment However, trends were quite different market by
market, with North America posting a near 13%
volumes plateaued last year, gain in activity – its strongest performance in
five years – while Europe and Asia saw volumes
decreasing by 0.7% in US$ terms fall 12% and more precipitous declines were
in the 12 months to June 2019, seen in Latin America at -38.5% y/y, and the
Middle East at -65.5%.
compared to the same period
in the year prior (excluding
development sites).
FIG 1: TOP CITIES FOR INVESTMENT (EX DEVELOPMENT)
New York
Los Angeles
San Francisco
London
Paris
Dallas
Washington
Tokyo
Hong Kong
Seoul
Atlanta
Chicago
Boston
Seattle
Houston
Sydney
Miami
Berlin
Phoenix
Shanghai
Madrid
Frankfurt
Denver
Singapore
Beijing
$0 $20 $40 $60 $80
USD Billions
Annual Volume Year to Q2 18 Annual Volume Year to Q2 19
SOURCE: CUSHMAN & WAKEFIELD, RCA
05 WINNING IN GROWTH CITIES
01 02 03 04 05
These trends were replicated at a city level, with Despite seeing a fall in volumes of
New York strengthening its position as the number
one global city for investment with volume growth 19%, Tokyo was the highest ranked
of 20%. Overall the US took 13 of the top 25 places Asian market and reclaimed its top
in the global ranking, nine of which saw volumes regional spot from Hong Kong.
rise on the previous year, led by Boston, up 66% y/y,
Seattle up 38%, and San Francisco, up 35% y/y.
APAC meanwhile claimed seven of the top 25 cities
compared to five in Europe. As with North America, a more notable fall of 38% y/y. Beijing meanwhile
a number of these destinations were in growth was the fastest growing major Asian city, with
mode and the top 25 overall again outperformed, volumes doubling, resulting in the city moving up
with volumes rising 5% and their market share 11 places in the ranking to number 25.
increasing from 53% to 56% as investors focussed
In Europe, London and Paris remained dominant,
on the biggest and most liquid markets.
both ranking in the global top five, but both also
Despite seeing a fall in volumes of 19%, Tokyo was saw a fall in volumes. Madrid was the fastest
the highest ranked Asian market and reclaimed growing European target, with volumes up 144%,
its top regional spot from Hong Kong which saw ahead of Berlin, up 20% y/y, and Frankfurt, up 19%.
FIG 2: SECTORS OF ACTIVITY
SECTOR TRENDS TO WATCH
30%
Sector trends have diverged in the past year,
with alternatives such as residential gaining
20% further favour globally, while retail has struggled
to find its floor, with volumes down 10% thanks
to falls in Europe and Australia. Interestingly,
10%
however, retail volumes were up in Asia and North
America, with Beijing, Dallas, Houston and Miami
Change in Investment to Q2 2019
instrumental in driving this, underlining the fact
that the sector is in demand when pricing and
0%
the macro environment are aligned.
Logistics meanwhile remained highly favoured but
stock shortages and a reduction in the number
-10%
of very large portfolio trades have left volumes
down. However, along with residential, logistics is
one sector where volumes are still well above the
-20% five-year average, underlining the structural shift in
portfolio allocations that has taken place. Offices
and hotels are holding their ground, while retail
-30% now stands 15% below its five-year average, after
volumes peaked globally in 2015.
Cross-border investment has followed a broadly
-40% similar trend, with logistics down most notably due
Apartment Dev Site Hotel Industrial Office Retail
to the importance of foreign capital in the large
Overall Cross-Border
portfolio trades seen in 2017/18. Development and
SOURCE: CUSHMAN & WAKEFIELD, RCA office investments meanwhile have seen an increase
in foreign investment, particularly in Asia and for
offices, in Asia Pacific and North America.
CUSHMANWAKEFIELD.COM 06
FIG 3: TOP CITIES FOR CROSS-BORDER INVESTORS (EX DEVELOPMENT SITES)
London
New York
Paris
Madrid
Sydney
Shanghai
Los Angeles
Frankfurt
Seoul
Singapore
Berlin
Hong Kong
San Francisco
Amsterdam
Boston
Helsinki
Warsaw
Washington DC
Munich
Beijing
Dublin
Vienna
Chicago
Dallas
Dusseldorf
$0 $5 $10 $15 $20 $25 $30
USD Billions
Annual Volume Year to Q2 18 Annual Volume Year to Q2 19
SOURCE: CUSHMAN & WAKEFIELD, RCA
London was still
the top city for
international real
estate investment.
07 WINNING IN GROWTH CITIES
01 02 03 04 05
INBOUND CROSS-BORDER ACTIVITY
The importance of geopolitics has of course been
manifest in the past year, impacting cross‑border
inflows into the US, UK and Hong Kong for example,
while encouraging a more robust performance in
secure, stable markets such as Australia, Singapore ASIAN CITIES HAVE MADE THE MOST
and Sweden. IMPRESSIVE GAINS IN MARKET SHARE
OVER THE PAST YEAR
Nonetheless, even though volumes spent by
inbound investors dropped 26% on the year, London
was still the top city for international real estate
investment. Despite a general weakening in global Among European cities, London and Paris are
demand in the US, New York leap-frogged Paris into perennial top five targets but there was some
second place for global capital, driven by a handful switch around in other areas, with Madrid rising 19
of major deals from Canadian and German players places to 4th globally, Frankfurt up eight to take
in particular, led by Brookfield and Allianz. a top 10 spot and Warsaw rising 26 to break into
the top 20. Berlin meanwhile dropped back after
European cities remained the most visited by
a strong 2018, with foreign investors struggling
foreign investors, with 12 of the top 25 global
to find stock, as they did in some other strong
targets, followed by seven in the USA and six in
performers from 2017/18 such as Helsinki, Munich
Asia. However, it was the Asian cities which made
and Vienna.
the most impressive gains in market share over
the past year, most notably Beijing which rose In the US, New York easily regained its top five spot
52 places in the global ranking. Other strong risers as a cross-border metro target, which it lost for the
in APAC were Seoul, up 25 places, Singapore up 19 first time the previous year as geopolitical tensions
and Sydney, rising eight places into the global top impacted. The biggest increase in cross-border
five as the most popular Asia Pacific market for volumes in the US was however in Boston, which
international capital. rose 40 places to number 16.
CUSHMANWAKEFIELD.COM 08
WHERE IS CAPITAL COMING FROM?
FIG 4: SOURCES OF INTERNATIONAL CAPITAL The sources of capital crossing borders into real
estate became more diverse in the past 12 months.
APAC remained the biggest source region overall,
$450 for the 4th year running, but outbound volumes
dropped nearly 13% and its market share eased
$400
to 38% overall. By contrast North American
capital increased 18%, capturing a market share
of 30% which was its highest since 2015, while
$350 European outbound capital rose 3.3% to 27%
of all cross‑border spending.
$300 In North America, the US was the largest source
of capital, accounting for 22% of all cross-border
Annual Volume to Q2
investment globally, but Canada rose strongly,
USD Billions
$250
with volumes more than doubling and the country
taking a 17% global share.
$200
Among investors from APAC, those from Singapore
were the most prolific, ranking 4th globally,
$150
followed by South Korea, ranking 7th after a
50% increase in cross-border spending over the
year. Japanese capital also continued to stir,
$100 rising 61%, ranking as the 13th largest source of
international capital. Last year’s regional leaders,
China and Hong Kong, both fell back into 11th and
$50
8th place respectively.
Amongst Europeans, Germany ranks highest and,
$0
2014 2015 2016 2017 2018 2019 alongside the UK and Switzerland, increased
overseas investment last year. France and Sweden
MEA N. America L. America are also major overseas players, meaning five of
Europe APAC the top 10 source countries are in Europe, with
SOURCE: CUSHMAN & WAKEFIELD, RCA an increased share looking at global not just
regional investment.
09 WINNING IN GROWTH CITIES01 02 03 04 05
TARGETS FOR INVESTMENT
Middle Eastern capital stabilised after two years of Europe remains the top cross-border target, but all
decline, with Israel, Qatar, Bahrain, UAE and Kuwait regions are tending to see increased interest, if not
the leading investors, but Qatar the most dynamic, necessarily an increase in transactions, depending
with volumes rising 183% year on year. Outflows on deal availability, pricing and competition. The
from Latin America also stabilised and, indeed, led overseas money flowing into Europe and North
by Mexico and Chile, started to expand while capital America is relatively evenly divided between global
from Africa fell back after a record 2017/18. and regional sources, while in APAC, regional
sources remain very much dominant, particularly
Hong Kong followed by Singapore and mainland
FIG 5: CROSS BORDER INVESTMENT TARGETS China. Next on the target list for APAC capital after
$180
Asian cities has tended to be Europe, led as ever by
London but with Paris and Frankfurt closing the gap
and others such as Warsaw and Prague seeing very
$160
strong demand growth. In general among APAC
investors, offices are very much the favoured target
$140 at 57% of all investment, followed by logistics.
Among European buyers, offices are also the top
$120
sector target at 48% of investment, but residential is
Annual Volume to Q2 2019
now number two at 19% and after Europe, US cities
USD Billions
$100 have been preferred. For Middle Eastern investors,
North America and Europe have switched round as
$80 targets this year, with the US taking the lead, and
demand is across a diverse group of sectors, led by
$60
offices but with residential and hospitality next in
line. US and Canadian buyers meanwhile have again
favoured Europe, albeit Canadian flows into the
$40
US have been strong. Office followed by retail and
apartments have been the top targets.
$20
0
APAC Europe N. America MEA L. America
Global Capital Regional Capital
SOURCE: CUSHMAN & WAKEFIELD, RCA
CUSHMANWAKEFIELD.COM 1011 WINNING IN GROWTH CITIES
01 02 03 04 05
CLIMATE CHANGE
03 & GLOBAL CITIES
Earlier this year, France and It is therefore clear that climate change, and what
governments around the world are or aren’t doing
the UK became the first major about it, must be firmly on the real estate agenda.
economies to commit to carbon In this spring’s Investment Atlas, we outlined
what were, in our view, the three main climate
neutrality by 2050, just as considerations for investors – the asset, the
headlines in Paris warned of location, and its management – and how each of
these should be considered when making climate
the hottest day on record and change-conscious investment decisions.
Londoners learned that the Focussing in on location, in the following pages
climate of their city would we outline in more detail the four climate resilience
factors that we view as paramount for investors to
resemble Barcelona’s by the assess when deciding how to allocate capital across
different geographies: existing and future physical
year 2050, even assuming risk, existing and planned government policy,
global emissions were brought location preparedness and resources, and migration
and socio-economic impact.
under control.
In examining this topic, it is important to
differentiate between sustainability and resilience,
as the two are often conflated, which is unsurprising
given the relatively recent spotlight on these
topics by investors. For the purposes of this report,
sustainability will be taken to refer to all measures
designed to decrease, mitigate or avoid a negative
impact on the environment. This often takes
the form of measures such as reducing carbon
emissions and water usage, using renewable forms
of energy, and the like. While this is an important
and laudable endeavour, it differs from climate
resilience, which refers to the degree to which a
location is prepared for the anticipated effects
of climate change, such as more severe weather
patterns, rising sea levels, or drought. This can take
a variety of forms and will largely be dictated by
the specific threats faced by a city, often including
a focus on infrastructure and governance.
The following discussion focusses on resilience and
is intended as a starting point for discussion around
what measures investors should be taking to
mitigate their exposure to what are becoming very
real threats, and how strategy should be adapted.
CUSHMANWAKEFIELD.COM 12EXISTING AND FUTURE PHYSICAL RISK
The first and probably most immediate factor as well as economic losses and losses per unit of
that investors must consider when assessing the GDP, all on an annual average basis over the 20
climate resilience of their portfolios is the potential years between 1998 and 2017.
physical risk to their assets as a result of climate
All data collected for this ranking reflected existing
change and extreme weather events. As there are
physical climate risks only. However, the index may
a range of potential threats to an asset depending
also serve as a red flag for existing high-ranking
on location, comparing the risk across markets
countries who should understand the level of
may be challenging, requiring the quantification of
exposure and vulnerability to extreme weather
the risk of flooding, drought, extreme heat, severe
events as a warning in order to be prepared for
storms, and more, and assessing the potential
future extreme weather events that may be
impact to both the asset and its occupiers and
more frequent, more severe, or both.
other stakeholders.
Below is a selected list of top global real estate
While past physical losses are not necessarily
investment destinations and their CRI ranking.
indicative of, and may in some cases severely
understate future risk, they are nonetheless useful A low CRI ranking number (out of 181 countries)
to get a sense of the level of existing exposure indicates a higher level of risk, showing the marked
and vulnerability to weather-related events across disparity between cities even with comparable
different countries and geographies. levels of wealth. Singapore has the second lowest
level of risk for example, while Sweden and Finland
Weather-related fatalities and economic losses are
also perform well. France, Germany and the USA
two historic measures that can be used, and the
however have high levels of risk as a function of
Global Climate Risk Index 2019 (CRI), developed
past climate related losses.
by Germanwatch, compares death and death rates,
FIG 6: CLIMATE RELATED LOSSES
20-year Fatalities
average per 100,000 Loss in Loss per unit CRI
Country City fatalities inhabitants US$m (PPP) GDP in % Ranking
France Paris 1120.55 1.82 2,205.34 9.80% 18
Germany Frankfurt 474.75 0.58 3,945.82 12.40% 25
United States New York 450.50 0.15 48,658.91 34.50% 27
Spain Madrid 695.05 1.57 979.18 6.90% 34
Australia Sydney 47.90 0.22 2,394.19 25.20% 36
China Shanghai 1240.80 0.09 36,601.07 28.80% 37
United Kingdom London 152.20 0.25 1,481.00 6.80% 60
Austria Vienna 23.90 0.29 570.30 16.70% 60
Netherlands Amsterdam 84.50 0.51 220.04 3.10% 71
Korea Seoul 55.55 0.11 1,120.64 8.40% 80
Japan Tokyo 79.40 0.06 2,737.65 6.40% 93
Canada Toronto 11.30 0.03 1,742.02 13.00% 100
Ireland Dublin 2.10 0.05 173.50 8.70% 125
Sweden Stockholm 1.35 0.02 194.70 5.20% 146
Finland Helsinki 0.20 0.00 32.08 1.60% 167
Singapore Singapore 0.00 0.00 2.87 0.10% 180
SOURCE: GERMANWATCH. DATA AVAILABLE AT NATIONAL LEVEL ONLY
13 WINNING IN GROWTH CITIES01 02 03 04 05
EXISTING AND PLANNED GOVERNMENT POLICY
The quality, innovation and direction of government Extreme weather events should no longer be
action will be key to how well each city evolves in considered purely operational. In order to ensure
the face of urgent need for increased attention to business continuity and safeguard assets, capital
climate adaptation. Academic research suggests expenditure for resilience and adaptation measures
that central and local government play different and full engagement in adaptation policy making
roles in adaptation activities, with local authorities is essential to the long-term prosperity of any real
delivering direct adaptation (management, estate market.
planning, policy, and practice and behaviour
functions), whereas higher jurisdictions can
FIG 7: LEVEL OF CLIMATE CHANGE ADAPTATION
deliver the policy needed to create a supportive
IN KEY GLOBAL CITIES
environment. In this section, we consider the
progress made by local governments.
Investment Climate
Among the current top 30 cross border real estate volume change
investment destinations, most are located either rank (Year adaptation
by the sea or a major river. This inevitably puts to H1 2019) City classifications
these cities and their real estate assets in a more 1 New York 5
vulnerable position to rising sea levels, flooding,
hurricanes, etc. Hence, their policy response to 2 Los Angeles 4
climate change cannot be ignored. 3 San Francisco 3
A global study published in 2016 (M.Araos et al, 4 London 5
Environmental Science & Policy) was the first 5 Paris 4
systematic assessment of adaptation reporting
6 Dallas 1
in large urban areas. Researchers reviewed
997 local government adaptation initiatives in 7 Washington 1
over 400 urban areas with a population over 8 Tokyo 3
1 million and classified the cities into five categories.
9 Hong Kong 3
As at 2016, most of the current top 30 markets 10 Seoul 4
had some level of adaptation policies in place (see
11 Atlanta 1
Figure 7). London, New York and Toronto were
among the most “Extensive adaptors”, considered 12 Chicago 4
global leaders in this area, and had adaptation 13 Boston 5
initiatives responding to all five impacts identified
14 Seattle 4
by the Intergovernmental Panel on Climate Change
(IPCC): heat spells, drought, coastal exposure, 15 Houston 1
inland flooding, and human health issues. Paris, 16 Sydney 2
Los Angeles and Singapore, among other global 17 Miami 3
cities, were classified as “High Moderate adaptors”
18 Berlin 3
(scoring 4), having made efforts to integrate
climate change into city planning, but not yet as 19 Phoenix 1
comprehensively as the “Extensive adaptors”. 20 Shanghai 3
Other strong performers included Boston,
21 Madrid 1
Melbourne, Seoul, Chicago and Seattle.
22 Frankfurt n.d.
The research also discovered that over 80% of the
23 Denver 1
urban areas reviewed had no publicly-available
documentation of climate change adaptation. 24 Singapore 4
Eight out of the current top 30 real estate 25 Beijing 1
investment cities, six of which are US cities, were
26 Philadelphia 2
in this category (scoring 1), including Washington,
Madrid and Beijing. 27 San Diego 2
28 Austin 3
However, it is important to note that in the current
climate, cities are tending to move much faster than 29 Melbourne 5
national governments in introducing new policy 30 Toronto 5
around climate resilience, and investors seeking
to make comparisons across municipalities would SOURCE: M.ARAOS ET AL, ENVIRONMENTAL SCIENCE
& POLICY 2016, RCA, CUSHMAN & WAKEFIELD
benefit from reviewing the action, or lack thereof,
NOTE: 5=Extensive adaptors; 4=Moderate adaptors (high);
of their target cities. 3=Moderate adaptors (low); 2=Early stage adaptors;
1=Non-reporting; n.d.=No data
CUSHMANWAKEFIELD.COM 14Money alone is clearly not
enough to solve climate-
related crises, which is why
it remains important for
investors to consider a city’s
wealth alongside political will.
15 WINNING IN GROWTH CITIES01 02 03 04 05
LOCATION RESILIENCE & RESOURCES
It is evident that two of the key factors shaping The slower the redress, the more
which cities will be best able to respond to climate
change are, firstly, their inherent exposure to
difficult it will become for a city
climate-related effects, and secondly the level to ‘buy’ its way out of climate-
of action being taken to identify those possible related impact.
impacts and legislate to mitigate them. However,
there is a third variable that undoubtedly will play
a large role in determining which cities are able However, money alone is clearly not enough to
to deal with the consequences of climate change solve climate-related crises, which is why it remains
effectively, and which are not. This factor is access important for investors to consider a city’s wealth
to capital, as the best laid plans will not be effective alongside political will, as demonstrated by some
if there are not enough resources deliverable at wealthy cities which have experienced severe
both the national and local level to effectively weather-related events but taken little action
implement climate adaptation strategies. to mitigate the effects. Moreover, the slower the
redress, the more difficult it will become for a
Measuring relative expenditure and ability to spend city to ‘buy’ its way out of climate-related impact.
can be challenging and is dependent on the type of
risk being faced by a given city. Different measures It also needs to be remembered that the cities
may produce contradictory results – for example, most vulnerable to climate change will often be
an analysis of 10 global megacities placed New those with the least resource to meet this problem.
York in the top spot for overall expenditure and per Similarly, it will often be the less wealthy districts
capita spend, while a different analysis of US cities of richer cities that are most at risk. This mismatch
ranked New York poorly in relative terms for what in resource allocation between and within cities
it described as ‘Climate Readiness’. will therefore be a source of growing tension.
There are many ways to measure a city’s ability to
respond; the table below presents GDP per capita
as one such measure.
FIG 8: WEALTH BY CITY
City GDP per capita 2018 City GDP per capita 2018
San Francisco $105,646 Chicago $66,540
Frankfurt $99,644 San Diego $66,436
Seattle $ 91,479 Paris $65,850
Tokyo $86,358 Atlanta $61,761
Boston $85,899 Melbourne $58,178
Washington $80,326 Singapore $57,683
New York $79,964 Miami $52,613
Los Angeles $75,659 Phoenix $48,497
Denver $71,191 Hong Kong $47,589
Houston $69,591 Toronto $45,379
Philadelphia $69,257 Berlin $41,552
Dallas $68,649 Madrid $40,271
London $68,509 Seoul $32,778
Austin $67,908 Shanghai $18,263
Sydney $66,880 Beijing $16,913
SOURCE: CUSHMAN & WAKEFIELD, OXFORD ECONOMICS
CUSHMANWAKEFIELD.COM 16SOCIO-ECONOMIC IMPACT & MIGRATION
Aside from the physical impacts of climate change The scale of these movements can be globally
and a city’s ability to cope, there is another future significant, encompassing temporary and
outcome that will undoubtedly play a role in permanent relocation. Plans to stabilise Jakarta
shaping cities and their investment potential – included relocating 400,000 people from most
namely their role in the relocation of communities at-risk areas of the city for example, while
displaced by climate change. Hurricane Maria caused 130,000 people to leave
Puerto Rico in 2018. Figure 9 shows the recent
While the focus of climate resilience forecasting
history of such internal displacements, that is to say
tends to be on the physical risks imposed, it is
within a country’s own borders, dominated by cities
expected that climate change will disrupt migration
in Asia, Africa and North America.
patterns both within and across borders.
TOP 3 INTERNAL DISPLACEMENTS OF PEOPLE BY NATURAL DISASTERS IN 2018
INDIA CHINA PHILIPPINES
1,967,258 1,610,000 1,570,804
SOUTHWEST MONSOON TYPHOON MANGKHUT TYPHOON MANGKHUT
FIG 9: CLIMATE & DISASTER-LED POPULATION DISPLACEMENTS (2018)
Country Event Name Disaster Type Number of Displaced People
India Southwest monsoon Flood 1,967,258
China Typhoon Mangkhut Storm 1,610,000
Philippines Typhoon Mangkhut Storm 1,570,804
Southwest Monsoon (Habagat) /
Philippines Storm 902,312
Tropical Cyclone Son-Tinh
Nigeria Flood – 12 states Flood 600,000
China Typhoon Maria Storm 517,800
United States Hurricane Florence Storm 463,674
Indonesia Lombok Earthquake 445,343
Philippines Super Typhoon Yutu Storm 438,691
India Cyclone Titli Storm 400,336
United States Hurricane Michael Storm 375,000
Afghanistan Drought – 20 provinces Drought 371,318
Kenya Flood – 47 counties Flood 326,612
China Typhoon Ampil Storm 290,000
Somalia Flood – 9 regions Flood 289,176
SOURCE: THE INTERNAL DISPLACEMENT MONITORING CENTRE
17 WINNING IN GROWTH CITIES01 02 03 04 05
INVESTOR IMPLICATIONS
It is thought that most climate-related migration It has become abundantly clear that the impact
will be domestic, increasing the rate of urbanisation of climate change is no longer an abstract concept
as citizens in rural areas find their lives and for the future but rather is already upon us, and
livelihoods more and more difficult to sustain. This investors who do not actively consider the climate
will be inherently difficult to measure, as in a large mitigation strategies of the cities in which they
proportion of cases, the relationship between invest, do so at their own peril. As such, investors
climate change and relocation will not be directly should examine the physical risk, government
causal, with climate effects one of a series of access to resources and political will, and threat
impacting factors. from migration that their target cities face. Though
these factors can be difficult to measure and may
At the same time, while much of the movement will
not immediately paint a clear picture, they will go
be local, the potential cross border movement is
a long way in helping investors better understand
also significant. Europe saw an inflow of more than
the relative risks in their portfolios.
one million people from Africa in 2015, while half a
million people left Central America heading towards While major developed gateways ostensibly have
the USA in the past year. In both cases there were more resources to throw at any problem, some
multiple factors, but climate change was thought to have in the case of climate mitigation been slow
be one key driver. to act, whether through a lack of willingness to
acknowledge the seriousness of the situation, lack
of access to resources, or backlash from citizens
seeking to avoid disruption in the short term.
The outlook for emerging markets is equally
complex, with those markets with the least resource
to address climate change often the most exposed,
PLANS TO STABILISE JAKARTA INCLUDED and often already grappling with rapid urbanisation
RELOCATING 400,000 PEOPLE FROM straining infrastructure. However, in some cases this
MOST AT-RISK AREAS OF THE CITY WHILE rapid growth provides opportunities to leapfrog
HURRICANE MARIA LED TO 130,000 older cities, with new neighbourhoods addressing
PEOPLE LEAVING PUERTO RICO IN 2018 these threats from the outset, unconstrained by the
need to retrofit.
While the cities that have the potential to benefit
from climate change are by and large located in
There is also the possibility that some cities, in the global north, the issue is by no means as simple
the long-term horizon, will risk being uninhabitable as one of latitude, and the changing climate will
due to extreme climate impacts. The most pose risks everywhere, not least to ecology, with
immediate example of this may be in the Middle the externalities of human intervention difficult
East: with average temperatures in the summer to predict.
months already very high, future increases may
test the limits of human tolerability. However, Winning cities will therefore have the right
this may also manifest itself in cities with rising combination of resources, political will, and
sea levels where, at some point, little more can ingenuity, to explore creative solutions to preserve
be done to further manage this without radically their infrastructure, quality of life, and appeal to
damaging ecosystems. investors. In some cases, this will mean having the
courage to break with long-established traditions
It is also worth noting that there are some cities with regard to architecture, urban planning,
which may stand to benefit from climate change, and governance.
as existing harsh weather conditions moderate,
potentially opening new opportunities. These Investors should now start to consider how this
cities should be aware of the possibility of more should impact their global weightings, and start
migration as they increase in attractiveness due to act accordingly.
to improved climate or job opportunities.
The potential for such large scale and volatile
population movements will clearly be a
destabilising factor in both the areas they leave and
the cities they move into. Winning cities, therefore,
will be those that are able to invest not only in
physical resilience, but also in the quality of their
offering and infrastructure, and are able to retain
their population or absorb additional net migration.
CUSHMANWAKEFIELD.COM 18GREEN BUILDINGS
The whole life cycle of a building, from design
to construction, occupancy to demolition, has
extensive direct and indirect impacts on the
environment. In the UK the built environment
contributes about 40% of the total carbon
footprint. Below we track the number of green
certified prime offices as a percentage of all prime
office buildings in major office markets globally,
either with LEED or BREEAM certification, or a local
green certification. With higher building standards
and tighter government regulations in recent years,
some emerging markets and those with a newer
CBD appear high in the ranking. Conversely, some
cities received a low ranking for their prime CBD,
but may have newer submarkets not included that
have much higher levels of accreditation.
TOP 3 CITIES WITH GREEN CERTIFIED
PRIME OFFICE BUILDINGS CHICAGO
NEW YORK
SAN FRANCISCO
56% 18%
LONDON 46% 50%
75%
38%
22%
WASHINGTON DC
LOS ANGELES
DALLAS
37%
BUCHAREST MEXICO CITY
71%
SYDNEY
71%
RIO DE JANEIRO 36%
19 WINNING IN GROWTH CITIES01 02 03 04 05
20%
HAMBURG MOSCOW
AMSTERDAM 8% BERLIN
WARSAW
31% 15%
75% 57%
35%
37%
LONDON BRATISLAVA
20% 13% 27%
FRANKFURT 30%
PRAGUE
MUNICH
PARIS
27% BUDAPEST
71%
MILAN
BUCHAREST
25%
MADRID 20%
33%
ATHENS
18%
BEIJING
43%
TOKYO
SHANGHAI
14%
30%
HONG KONG
MUMBAI
SINGAPORE
64%
22%
JAKARTA
71%
51%
SYDNEY
MELBOURNE
SOURCE: CUSHMAN & WAKEFIELD
CUSHMANWAKEFIELD.COM 20CASE STUDIES
Find out how climate change is impacting the
following cities, and what is being done to address it.
JAKARTA – CITY RELOCATION
After months of speculation, it was announced The 180,000 hectare yet-to-be-built new capital’s
in August this year by the Indonesian President exact location has not yet been announced,
Joko Widodo that the government plans to but as per President Widodo’s televised speech,
relocate its capital city from Jakarta to a new site minimising natural hazards is a priority. This
in East Kalimantan, the Indonesian portion of the includes physical risks related to climate change
island of Borneo. If the Indonesian parliament and extreme weather, such as rising sea level and
approves this proposal, this initiative would be the flooding, as well as natural disaster threat such as
first case of its scale. earthquake and volcano eruption. This move would
take 10 years and cost over US$30bn, making this
Jakarta’s problem is a cocktail of natural disasters
an extraordinary example of how far a government
and environmental issues caused by intense human
will go to combat climate risks.
activity. The biggest physical risk related to climate
change for Jakarta is land subsidence and rising
sea levels, which combined with the unregulated
draining of aquifers for many years, means that over
40% of the city below sea level. As Jakarta becomes
Jakarta’s problem is a cocktail
one of the fastest-sinking cities in the world – up to of natural disasters and
2.5 metres in the past ten years, sea water floods the environmental issues caused
north part of the city frequently. In addition, as the
city is built on land that was originally swamp, river by intense human activity.
overflow often floods the east of the capital.
21 WINNING IN GROWTH CITIES01 02 03 04 05
SINGAPORE – COASTAL DEFENCES
According to the CRI 2019 report, Singapore has
had no deaths and very limited financial loss due to
extreme weather in the past 20 years, which places
it as one of the least affected countries in the world
by extreme weather events. However, this doesn’t
mean that the city-state is immune from climate
risk. Prime Minister Lee Hsien Loong devoted a
large portion of a major policy speech in August
2019 to how the low-lying city should prepare
itself for climate change and its impact. He fully
acknowledged that Singapore is more vulnerable
to climate change than the global model suggests,
due to its proximity to the equator. He highlighted
rising sea levels as “one grave threat”, especially
to its eastern coastline.
As one of the most advanced economies in
the world, Singapore has the financial means
to implement “a 50- to 100-year solution”.
Two potential solutions have so far been
highlighted, namely building coastal defences such
as polders and dykes along the eastern coastline
or reclaiming a series of islands and connecting
them with barrages. Both options would result in
reclamation of land, which could then be used for
new developments such as housing and other uses.
Although such plans are not expected to complete
in the current generation, this could lead to the
creation of a “Great Eastern Waterfront”, which
would be built with rising sea levels in mind
and would therefore be well insulated from
its risks. In the shorter term, the government
has also introduced new policy requiring new
developments to be built at least 4 metres above
sea level, up from 3 metres previously, with
critical infrastructure built even higher, to help
future-proof these investments.
Prime Minister Lee Hsien Loong
devoted a large portion of a
major policy speech in August
2019 to how the low-lying city
should prepare itself for climate
change and climate risks.
CUSHMANWAKEFIELD.COM 22TOKYO – FLOOD RISK MANAGEMENT
Greater Tokyo is a prime example of long and well-
established flood disaster prevention and one of the
few regions in the world that has taken significant
measures to address flooding risk.
Greater Tokyo is located on an alluvial floodplain
with half of its population and 75% of gross
assets concentrated in the lowlands. Greater
Tokyo has invested billions of dollars into flood
preparation and developed extraordinary storm
water infrastructure over the last few decades.
This includes the Kandagawa River Ring Road
No.7 Underground Regulation Reservoir, which
is designed to store up to 540,000 cubic metres
of flood water. Further regulating reservoirs are
currently under construction to create a total
reservoir capacity of 3.3 million cubic metres in
Greater Tokyo. A series of underground tunnels,
costing US$2 billion in total, have also been
constructed to store and discharge excess
rainwater into the Edo River. An artificial wetland,
Watarase-yusuichi, is built in the centre of the
Kanto plain to act as a detention basin as part
of the green infrastructure.
The national and city government has also made
great efforts to provide information and educate
the Greater Tokyo population to respond to
flooding in terms of what to do and where to go.
A number of parks in the Greater Tokyo area are
designated “disaster prevention parks”, for example,
where people who have to be evacuated from their
homes can access cooking facilities, emergency
toilets, solar powered lighting, etc.
Despite this preparation, it is clear that Tokyo
can’t rest easy, with risks changing as extreme
weather events increase and investment needs
to be maintained. According to the Japan
Meteorological Agency’s estimates, the frequency
of rainfall of more than 3 inches an hour jumped by
70% over the past 30 years, while the frequency
of rainfall of two inches an hour increased by
30%. Global warming has not only brought more
rainfall but also more intense and extreme weather
conditions which are tests to a city’s flood risk
management capacity.
23 WINNING IN GROWTH CITIES01 02 03 04 05
CENTRAL AMERICA – CLIMATE REFUGEES
Guatemala, El Salvador and Honduras in Central For instance, western Honduras used to be a
America, known as “the northern triangle”, are the prime coffee-growing area, but more extreme
largest source of asylum seekers crossing the US and unpredictable weather in the region, such
border in recent years. It is estimated that over half as later summer rainfall, drought fuelled by El
a million Salvadorans, Guatemalans, and Hondurans Nino and disastrous flooding rains, devastated
left their home countries and headed north in the coffee plants which are sensitive to temperature
eight months between Oct 2018 and May 2019. and rainfall changes. Moreover, it is estimated that
Climate change, which has made an agricultural 70% of coffee farms have been affected by an
livelihood impossible to sustain locally, is believed epidemic called “leaf rust”. The fungus is expected
to be one of the main drivers behind this migration. to die during cooler evenings but warmer than
normal nights in recent years have allowed it to
The northern triangle is known for its high poverty
ravage coffee plants. All these irregular conditions
rate, low employment rate, widespread violence
are believed to link to climate change and
and poor governance which have been forcing
global warming.
its people to look for economic opportunities
and a more secure life elsewhere for years. Yet its As a result, food security has become a pressing
high vulnerability to natural disaster also played issue for many in the region to the point that
a key role. The Central American Dry Corridor, some have had to abandon their land and home.
which encompasses 58% of El Salvador, 38% of It is understood that many opt for an internal
Guatemala, and 21% of Honduras, is extremely relocation first to look for employment in the cities,
susceptible to irregular rainfall. Repeated droughts but many are not able to survive due to the lack
since 2014 and changing weather patterns have of employment opportunity or the prevalence of
been highly disruptive to farming and may take organised crime. As a result, climate change is often
years to recover. an underreported reason for migration. Leading
media commentators have suggested that in many
ways, the migrant caravans are carrying climate
refugees. We would go one step forward to say
that this could be a forestate of more widespread
population movements to come.
CUSHMANWAKEFIELD.COM 24Reservoir levels in September
reached 80% of capacity,
meaning that crisis has been
averted, for now.
posted online a household-level map of water usage,
so that residents would be able to compare their
consumption to their neighbours, and be
encouraged to cut back even further.
The city prohibited the use of municipal water for
non-essential purposes such as pools or lawns, and
water allocated to agriculture was reallocated to
the city. In the months leading up to Day Zero, the
city also implemented a new water pressure system,
improving overall water efficiency in the city and
estimated to have decreased consumption by 10%.
The tactics appear to have been effective, not just
in the avoidance of Day Zero, but also in long-term
habit forming. Peak water usage in Cape Town has
decreased by more than 50% in 3 years, and while
dam water levels have recovered, the habits of 2018
remain – all the better, as living with water scarcity
is likely Cape Town’s new reality.
Over time this scarcity will have an economic
impact, with Cape Town contributing approximately
CAPE TOWN – DROUGHT 22% of South Africa’s national agricultural GDP.
Should water rationing impact the industry’s
access to water, it is possible that some farms will
Last spring, Cape Town was being held up as
no longer be viable, which could affect migration
one of the first victims of climate change, with a
patterns in the region, potentially increasing the
prolonged 3-year drought dropping water reservoir
urban population and straining infrastructure.
levels perilously close to 10%. However, Day Zero,
or the day taps would run dry and Capetonians Cape Town is not the only city suffering from
would have to queue at one of 200 water centres climate change related drought – this year,
for 25 litres per person per day (enough for a Chennai has been battling sever water shortages,
two-minute shower and no more), was narrowly where reservoir levels have already dropped
avoided, through a series of government and below 10%, and citizens have been forced to
community led strategies, and a very well- buy water from private resellers, as the city’s
timed end to the drought. Reservoirs levels this public water management system has not proven
September reached 80% of capacity, meaning that sufficiently robust. According to the Council of
crisis has been averted, for now. Energy, Environment and Water in India, an NGO,
approximately 750m people in South Asia will face
In the three months prior to Day Zero, both the
extreme shortages and 1.8bn chronic shortages
government and civic organisations launched
by 2050.
campaigns educating citizens about water saving
tactics, posting signs in bars and restaurants Implications for resource availability will be a key
encouraging people to use the minimal amount area of threat emerging from climate change and
of water necessary for hygiene, and other while Cape Town shows the potential of community
grassroots‑level initiatives such as ‘dirty shirt’ led action to influence behaviour, it also shows the
challenges at the office. The city, in an effort need for long-term holistic planning to effectively
to gamify the reduction of water consumption, mitigate its consequences.
25 WINNING IN GROWTH CITIES01 02 03 04 05
CHINA – SPONGE CITIES
Several decades of rapid urbanisation have proven While managing storm water and flooding is one
extremely successful for China from an economic obvious benefit, the scheme has a second benefit
perspective; however, the environmental costs have for citizens – two thirds of Chinese cities regularly
often been high. Among these, the rapid paving suffer from water shortages, and traditional sewage
over of many lakes and rivers has led to increased systems mix rainwater with sewage, making it
incidence of flooding, including a large-scale flood unusable. Through capturing and storing rainwater,
in Beijing in 2012, killing around 80 people and it can be treated for use when supplies run low.
forcing the evacuation of over 50,000. The Sponge
By 2030, 80% of each of the 30 cities is expected
City initiative was launched shortly afterward in
to perform sponge functions. This may prove tricky,
2015, and aims to address this flood risk in future.
as government subsidies will end in 2020, so further
The pilot project began with 16 ‘model sponge works will need to be funded by local councils, or
cities’, later extended to 30 cities, including in public-private partnership. This lofty goal will
Shanghai. The goal is for ‘sponge districts’ in these require new neighbourhoods to overcompensate
cities to contain 20% of built area with “sponge” for the rest of the city, as it would be extremely
functions, meaning that at least 70% of storm water challenging to retrofit existing districts in such a
should be captured, reused, or absorbed. This is short period of time.
being implemented through a number of measures,
including storage ponds, marshes, green roofs,
rain gardens, and permeable surfaces replacing
concrete where possible.
CUSHMANWAKEFIELD.COM 26PARIS – EXTREME HEAT
With multiple cities across Europe reaching Measures include public realm cooling interventions
record‑high temperatures this summer, it is such as misting machines in squares, turning fire
clear that the extreme summer weather that hydrants into water fountains, and leaving parks
has been predicted for some time has arrived. open much later than normal so that citizens can
With temperatures only predicted to increase in remain cool in public spaces. Measures are also
the coming decades cities will need to tackle this put in place to ensure that those who cannot cool
challenge head-on, and Paris is doing just that, their homes effectively have somewhere to go, such
with a number of measures put to the test in this as opening air-conditioned spaces in town halls,
summer’s heatwave. libraries or churches to the public, with public pools
remaining open later than usual as well.
After the intense heatwave of 2003, which
caused nearly 15,000 people in France to die For those who may be less able to visit such
prematurely, the city of Paris put in place a number centres, such as the elderly or less mobile, the
of measures to help citizens, especially vulnerable government has introduced Chalex – a service that
ones such as children and the elderly, stay cool anyone who feels they are particularly vulnerable to
when temperatures rise to extreme highs. This is extreme heat can register for. When temperatures
especially important given the heat island effect climb registrants are checked on, provided advice,
of cities: the use of concrete, stone, and other and, if necessary, visited by a medical professional
materials that retain heat causes cities to get or taken to a cooling centre.
noticeably warmer than surrounding areas, with
Provision is also being made for children, with
particularly prone areas in Paris estimated to get
kindergartens receiving air conditioners, children
up to 10 degrees hotter than areas outside the city.
being sent home with ‘heat wave kits’ to help keep
them cool, and exams even being postponed when
the temperatures have been deemed too extreme.
Measures include public realm The provisions appear to have been successful,
with just 15 people in Paris reported to have died as
cooling interventions such as a result of this year’s heatwave, where temperatures
misting machines in squares, reached record highs of over 42 degrees Celsius,
down from approximately 500 people in 2003.
turning fire hydrants into water They are also part of a larger set of initiatives by
fountains, and leaving parks the city’s mayor, Anne Hidalgo, to boost the
open much later than normal so city’s resilience.
that citizens can remain cool in This year, the city launched its Paris Climate Action
Plan, which includes 500 measures aiming to
public spaces. improve both sustainability and resilience, and make
Paris carbon neutral by 2050. The city has recently
announced aims to have 50% of the city covered in
porous, planted areas by 2030, which will both help
to mitigate the heat island effect, and also help with
water absorption during severe rainfall, to prevent
flooding. As the first four schemes, including spaces
outside Paris’ city hall, the Opera Garnier, and along
the banks of the Seine demonstrate, this ambitious
goal will be a shift for the city away from formal
gardens and may alter the city’s relationship with its
architecture, demonstrating that in order to become
climate resilient, cities may require the courage to
break with tradition and be willing to look at their
assets in a new way.
27 WINNING IN GROWTH CITIES01 02 03 04 05
In order to become climate
resilient, cities may require
the courage to break with
tradition and be willing to look
at their assets in a new way.
CUSHMANWAKEFIELD.COM 28ROTTERDAM – FLOOD PLAIN MANAGEMENT
With approximately one third of the country Since these massive works, however, the attitude
and 80% of the city itself below sea-level, it’s no of the Dutch has evolved somewhat – after
surprise that Rotterdam has proven very adept at another two serious floods in 1993 and 1995,
addressing growing climate risks. where the dikes nearly burst and approximately
200,000 people were evacuated, the ongoing
After the North Sea flood of 1953, which led to
vulnerability of the region was thrown into sharp
water levels up to 5.6m above average and known
relief. This led to a change in thinking, and in the
in Dutch parlance simply as ‘The Disaster’ due both
mid-2000s a new project, called Room for the
to the scale of damage to property and the human
River, was launched. Where previously the focus
toll, the Dutch government began implementing a
was on keeping water out, the new set of projects,
series of construction projects known as the Delta
which are still ongoing, focus on finding ways to
Works, aimed at preventing similar destruction in
mitigate the impact of storm flooding rather than
the future. The works, spanning several decades,
trying to fight against it. This involves a number
involved a litany of projects such as new dams,
of infrastructure projects, including increasing the
levees, locks, and storm surge barriers, at a cost of
size of floodplains, to redirect floodwaters to safe
approximately $7bn. The project culminated in 1997
locations away from cities.
with the completion of the Maeslantkering, a barrier
protecting Rotterdam and the surrounding region On a city level, Rotterdam is also focusing on civic
from storm surges, and designed to withstand the infrastructure such as parks, plazas, and even
force of a 1 in 10,000 year surge. parking garages have been designed to flood,
so that damage from flooding, when it inevitably
The precautions are warranted – aside from the
does happen, can be minimised.
potential disruption and damage to Rotterdam and
its citizens, as Europe’s largest port disruption to Rotterdam has learned to adapt and innovate
Rotterdam would mean disruption to the movement to the risks it faces, and demonstrates that
of goods across the continent. good governance and early intervention are the
cornerstones of its continuing success in heading
off climate-related risk.
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