WINNING IN GROWTH CITIES 2019/2020 - A Cushman & Wakefield Global Capital Markets Report - Cushman & Wakefield Colombia

WINNING IN GROWTH CITIES 2019/2020 - A Cushman & Wakefield Global Capital Markets Report - Cushman & Wakefield Colombia
              GROWTH CITIES

A Cushman & Wakefield
Global Capital Markets Report
WINNING IN GROWTH CITIES 2019/2020 - A Cushman & Wakefield Global Capital Markets Report - Cushman & Wakefield Colombia

                                 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

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  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.

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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.

         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.

WINNING IN GROWTH CITIES 2019/2020 - A Cushman & Wakefield Global Capital Markets Report - Cushman & Wakefield Colombia
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          CORE                 CORE-PLUS TO                     OPPORTUNISTIC
                                      THEME                             THEME
     Urban Logistics
                                        UK                            Development
                                     WHERE?                            WHERE?
     Global Gateways
                                     London                         Gateways, global
                                       WHY?                               WHY?
 Structural change driving
                               Attractive pricing and               Meeting office and
 demand and densification
                                post-Brexit bounce                  multifamily supply
                                                                    shortfalls in CBDs
        US Sunbelt
                                       China                             THEME
         WHERE?                                                           Debt
     Office, logistics,
                               Beijing, Guangzhou &                     WHERE?
                              Chengdu plus Shanghai                      Global
         WHY?                      and Shenzhen
   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
                               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
                               constrained markets”
    “No cycle” sectors
         WHERE?                       THEME                         Emerging markets
  “Living” sectors, global             Retail
           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
                                 signs emerging of              occupier needs mature
                                long‑term potential
      US and Europe
   Diversification, yield,
   downside protection

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   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).


   New York
 Los Angeles
San Francisco
  Hong Kong

                 $0                             $20                           $40                    $60                    $80
                                                                           USD Billions
                      Annual Volume Year to Q2 18     Annual Volume Year to Q2 19


WINNING IN GROWTH CITIES 2019/2020 - A Cushman & Wakefield Global Capital Markets Report - Cushman & Wakefield Colombia
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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%.

                                                                                                       SECTOR TRENDS TO WATCH

                                                                                                     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,
                                                                                                     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
                                                                                                     the macro environment are aligned.
                                                                                                     Logistics meanwhile remained highly favoured but
                                                                                                     stock shortages and a reduction in the number
                                                                                                     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.

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WINNING IN GROWTH CITIES 2019/2020 - A Cushman & Wakefield Global Capital Markets Report - Cushman & Wakefield Colombia

       New York
     Los Angeles
     Hong Kong
 San Francisco
Washington DC

                   $0                   $5                $10                 $15         $20   $25   $30
                                                                           USD Billions
                        Annual Volume Year to Q2 18   Annual Volume Year to Q2 19


               London was still
               the top city for
               international real
               estate investment.

WINNING IN GROWTH CITIES 2019/2020 - A Cushman & Wakefield Global Capital Markets Report - Cushman & Wakefield Colombia
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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.

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WINNING IN GROWTH CITIES 2019/2020 - A Cushman & Wakefield Global Capital Markets Report - Cushman & Wakefield Colombia

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
                                                                                                   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

                                                                                                   with volumes more than doubling and the country
                                                                                                   taking a 17% global share.
                                                                                                   Among investors from APAC, those from Singapore
                                                                                                   were the most prolific, ranking 4th globally,
                                                                                                   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
                                                                                                   8th place respectively.
                                                                                                   Amongst Europeans, Germany ranks highest and,
                                            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.

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01     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
                                                                                                       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
                                                                                                       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
                                                                                                       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
                                                                                                       offices but with residential and hospitality next in
                                                                                                       line. US and Canadian buyers meanwhile have again
                                                                                                       favoured Europe, albeit Canadian flows into the
                                                                                                       US have been strong. Office followed by retail and
                                                                                                       apartments have been the top targets.

                                                 APAC       Europe   N. America     MEA   L. America

                                                  Global Capital       Regional Capital


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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    12

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,


                                         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


01       02        03      04     05


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     14
Money 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.

01   02    03      04      05


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.


 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


                                                                                      CUSHMANWAKEFIELD.COM      16

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.


  INDIA                                           CHINA                          PHILIPPINES

1,967,258                                      1,610,000 1,570,804
SOUTHWEST MONSOON                              TYPHOON MANGKHUT                TYPHOON MANGKHUT


 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


01     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    18

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.

PRIME OFFICE BUILDINGS                                                            CHICAGO
                                                                                            NEW YORK
                                                       SAN FRANCISCO
                                                                                    56%           18%
                         LONDON                            46%                              50%

                                                                                      WASHINGTON DC

                                                          LOS ANGELES


                         BUCHAREST                                      MEXICO CITY


                                                                                                        RIO DE JANEIRO 36%

01   02         03      04        05


                               HAMBURG                                                     MOSCOW
             AMSTERDAM            8%       BERLIN
                        31%                15%
           75%                                                  57%

    LONDON                                                BRATISLAVA
                 20%                 13%            27%
                       FRANKFURT                          30%
                                 27%                 BUDAPEST


  MADRID                                                          20%


                                                                                                       HONG KONG









                                                                                                            CUSHMANWAKEFIELD.COM       20
Find out how climate change is impacting the
following cities, and what is being done to address it.


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.

01   02   03     04     05


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   22

                                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.

01     02      03     04     05


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    24
Reservoir 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.

01     02      03     04     05


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   26

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.

01   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   28

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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