Global real estate markets are exposed to climate-related risks that are largely ignored in property valuation and investment decisions, according to Oluwaseun Ajayi, a real estate economist and climate-risk scholar.
Ajayi, winner of the 2025 Emeritus Professor Sarah Sayce Award for Sustainability Research in the United Kingdom, said property markets continue to rely on outdated valuation models that fail to account for long-term climate threats such as flooding, heat stress, and sea-level rise.
He explained that most property valuations focus on historical sales data and current rental income, even though climate change presents risks that build gradually and can cause sudden asset losses.
“Until climate risk is properly priced, it will continue to be ignored,” Ajayi said.
Hidden risks in global property markets
Ajayi’s award-winning research, titled Pricing the Unseen, examined how climate risk is underestimated even in countries with advanced infrastructure and planning systems.
Using the UK’s Thames Estuary 2100 Plan, a major flood protection programme, his study found that property markets still fail to fully reflect long-term flood risks. According to his findings, some real estate portfolios could face hidden losses of up to 25 percent over time if climate risk is eventually priced correctly.
He described this as a financial risk, not just an environmental concern.
Why Lagos and Nigeria should be concerned
Ajayi said the implications are even more serious for Nigeria, particularly Lagos, where flooding has become a frequent occurrence in areas such as Lekki, Victoria Island, Ikoyi, Ajah, and parts of Badagry.
Despite major interventions like Eko Atlantic and the Lagos State Climate Action Plan, climate risk is not formally integrated into property valuation standards, mortgage lending, or insurance pricing.
According to Ajayi, delayed recognition of these risks could lead to sudden market corrections, loss of property value, and wider economic disruption.
What government should do
Ajayi recommended three immediate steps for Lagos State:
Introduce climate-adjusted property valuation, where flood risk, heat exposure, and infrastructure reliability are treated as measurable financial factors.
Treat adaptation infrastructure as a long-term financial commitment, supported by clear regulations, delivery timelines, and planning controls.
Create a Lagos Climate Risk Map, linked directly to property taxes, mortgage approvals, and insurance pricing.
He said these measures would improve market stability and investor confidence rather than discourage investment.
Investors and climate risk pricing
Responding to concerns that climate risk pricing could scare investors, Ajayi said investors are more concerned about unexpected losses than transparent risk assessments.
“Markets collapse when risk is hidden and suddenly revealed. Transparent pricing creates stability,” he said.
Can Africa adopt climate-risk tools?
Ajayi said African institutions can adopt advanced tools such as Climate Value-at-Risk and machine learning faster than expected. He noted that Nigeria already has access to key data sources, including satellite climate data and property transaction records.
The main challenge, he said, is coordination among government agencies, financial institutions, universities, and professional bodies.
Looking ahead
Ajayi said the award strengthens his focus on policy advisory work, capacity building, and applied research aimed at helping governments and investors make informed decisions.
He encouraged young African professionals to focus on producing practical, policy-relevant work that addresses real economic challenges.
