How climate change is reshaping real estate and economic geography — Swiss Re estimates the insurance protection gap to be 35% and growing, in Australia

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1. The impact of climate change on real estate and economic geography is becoming increasingly pronounced, as highlighted by Swiss Re’s estimate of a 35% and growing insurance protection gap in Australia. This gap indicates that many property owners and investors are underinsured against climate-related risks, which could have significant ramifications for both individuals and the broader economy.

   As climate change leads to more frequent and intense weather events—such as floods, bushfires, and rising sea levels—property values may become highly volatile. Areas that were once deemed safe could become increasingly at risk, leading to a potential decline in property values, particularly in high-risk zones. This will not only affect homeowners but also investors and developers, who may need to reassess the viability of their projects.

   Moreover, the growing insurance protection gap highlights the urgent need for better risk assessment frameworks and adaptive measures in real estate development. Policymakers, insurers, and the real estate industry must collaborate to enhance resilience against climate impacts, potentially reshaping locations deemed viable for future development.

   In summary, the intersection of climate change and real estate will demand innovative solutions and strategies. Emphasizing sustainable development, re-evaluating insurance models, and implementing effective urban planning will be crucial as we navigate these changes in economic geography.

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