Real estate valuation is reaching a turning point. For years, traditional appraisal relied mainly on market behavior, replacement costs, construction typologies, and location. However, the current context requires incorporating new variables that were previously treated as external: climate change and its direct and indirect impacts on habitability, infrastructure, operating costs, and, therefore, asset value.

This article is based on the document “El Futuro de la Valoración Inmobiliaria”, grounded in the thesis work of Eng. Manfred Rodríguez Jerez. It proposes a technical approach to integrate climate-related risks into the valuation process and into banking risk analysis. The goal is to provide a methodology that moves from general concern to quantification and decision-making.

In particular, it highlights that financial institutions and the real estate sector, given medium- and long-term mortgage horizons, cannot assume environmental stability. Threats such as recurrent flooding, extreme rainfall, rising temperatures, droughts, or sea-level rise can shift demand, increase maintenance and insurance costs, and even limit a property’s use.

The proposed framework draws from international references and adapts a risk approach to the real estate context by considering three core components:

1) Hazard: adverse climate events with the potential to cause damage (e.g., intense rainfall, heatwaves, droughts, flooding, or sea-level rise).
2) Exposure: property elements that may be affected (infrastructure, basic services, access, systems, living areas, and occupant wellbeing).
3) Vulnerability: sensitivity of materials and design, plus adaptive capacity, including mitigation and resilience measures (e.g., adequate drainage, water harvesting, physical protections, bioclimatic solutions, or more resistant materials).

To translate climate risk into an operational language, the document uses impact chains, which help explain the causal link between an event (for example, extreme precipitation), physical impacts (flooding or structural damage), functional impacts (service disruption or loss of accessibility), and finally economic impacts (repair costs, value loss, reduced demand, or higher credit risk).

A case study is analyzed to validate the proposed instrument, showing that integrating these criteria not only strengthens appraisal practice, but also enables a more fair and accurate recognition of mitigation measures in a project. In other words, resilience can become a value attribute, while lack of adaptation may translate into meaningful depreciation.

In summary, the future of real estate valuation is not only about comparing market prices. It requires understanding a property’s ability to withstand and adapt to a changing environment. This integration represents a technical improvement for valuers, a protection tool for the financial sector, and an opportunity to promote more sustainable and competitive real estate development.