Weigh climate change, UK property investors urged

By William Kemble-Diaz

LONDON (Reuters) - Climate change is a growing risk to older properties and southern UK cities, including London, and should inform the decision-making of property investors, one of Britain's biggest pension fund managers said on Friday.

In a joint study with University College London (UCL), Hermes said cities such as Southampton, Bristol and Cardiff, and the entire Thames estuary were most at risk to flooding, storm damage and subsidence through drought.

More northern ports such as Newcastle, Liverpool, Edinburgh, and Belfast were less exposed, it said.

Hermes is wholly owned by BT's pension fund. It manages the retirement savings of Britain's mail and telecommunications workers and has 12 billion pounds ($23.8 billion) of real estate under management.

A spokeswoman for Hermes said the company's property investment programme had started last year to consider environmental concerns such as flood risk. But it was finding it a challenge on some existing investments, she said, without specifying.

"It's relatively easy to inform our new acquisitions," she said. "The biggest challenge is in re-underwriting our existing portfolio."

Location was not the only environmental consideration for real estate investors.

According to the Hermes/UCL report, older buildings -- mainly residential and high street shops -- were more vulnerable to the risk of subsidence as temperatures rose because they probably had shallower foundations, the report said.