Realty Worsens Climate Crisis, Can Trigger Domino Effect

One may argue that the dependability of this investment is at an all-time low even if real estate prices are rising; Mumbai had a 10 per cent jump in property rates in 2023 while Delhi-NCR saw a 49 per cent rise in early 2025, which is jarring for many. In early 2025 Mumbai became the most expensive city in terms of real estate. Today, homeownership carries environmental risk as well as a financial one.

Data from the Internal Displacement Monitoring Centre shows that between 2011 and 2021 harsh weather caused around 3.6 million annual displacements in India. Bengaluru's IT districts experienced recurrent flooding in 2023, leaving high-value homes in places like Koramangala and Whitefield soaked for days.

The December 2023 floods in Chennai provided even more of a warning. Commercial and residential centre T Nagar saw streets buried when its long-buried lakes and water systems returned in their place.

"T Nagar is a perfect illustration of what happens when real estate development ignores hydrology," notes urban planner and Indian Institute for Human Settlements (IIHS) professor L Subramanian. "We have erected over natural drainage systems; nature is responding."

India's urban housing market is expected to increase at 9 per cent yearly in spite of these warnings; luxury projects are still rising in flood-prone, heat-exposed locations.

Should homes lose their assurance of sanctuaries, we must reassess our purchase, selling, and management of Indian city properties. This implies including contemporary planning, climate adaptation, and a critical reevaluation of the function of real estate as both a political and an economic tool.

Prime Real Estate's Hidden Costs

Access to high-end neighbourhoods, transportation, and employment defined the demand of real estate in India throughout decades. But in a time of climate uncertainty, risk is becoming increasingly relevant.

Extreme rainfall events in Mumbai have surged by 35 per cent over the previous two decades, increasing the flood risk for low-lying residential and commercial sectors, according to a 2022 study by the Indian Institute of Tropical Meteorology (IITM). Still, upscale projects are sprouting in areas more and more sensitive.

"Real estate investments create an illusion of permanency," notes Council on Energy, Environment, and Water (CEEW) climate risk expert Shweta Joshi. "But two decades from now sea-level rise and infrastructure stress may make a prime location today uninhabitable."

Beyond floods, heat is changing demand for homes. Cities like Delhi and Ahmedabad have observed notable micro-market variances depending on weather extremes. Homes with poor ventilation and high concrete exposure require 20-30 per cent more energy for cooling, according a 2023 assessment by the Centre for Science and Environment (CSE).

Professor of sustainable architecture Rajat Gupta of Oxford Brookes University, notes, "The way our cities are expanding without green cover or climate-conscious design is locking millions of people into energy poverty. We have to rethink urban living for climate resilience and passive cooling."

What controls Indian real estate, and may climate factor in? India's real estate industry runs under a mix of official rules and unofficial behaviour many of which neglect climate danger.

Current Legal Systems

Though it does not compel climate risk disclosure, the Real Estate (Regulation and Development) Act (RERA) 2016 seeks to promote openness. It outlines environmental and safety criteria of the National Building Code (NBC), 2016; and state-by-state variation in enforcement.

Within it, the rules governing Coastal Regulation Zone (CRZ) are designed to stop uncontrolled building in high-risk coastal regions, usually loosened for major projects. It is designed to regulate land use, municipal zoning rules are sometimes superseded by political pressure and speculative projects.

In what ways may climate influence:

Cities all around are including climate resilience into real estate management. Post-Hurricane Sandy, building rules in New York City call for raised ground floors and flood-resistant materials. Climate forecasts are used by the Netherlands to guide urban growth such that building does not block natural water courses. Japan tightly controls building in areas vulnerable to floods and earthquakes.

What inclusion of climate risk into real estate policy for India might mean:

1. Mandatory disclosures: Developers must to be obliged to disclose water scarcity, heat, and flood hazards as mandatory climate risks.
2. Climate-Linked Housing Loans: Penalties for high-risk projects and financial incentives for strong constructions.
3. Stronger Zoning Laws: Legal systems have to limit building in places sensitive to the environment.
4. Retrofitting incentives: Government-funded initiatives to add climate defences to already-existing buildings.

"Real estate cannot continue to run in a regulatory vacuum when climate change is already shaping market risks," says Ramesh Prabhu, Chairman of the Maharashtra Societies Welfare Association. "We will see a rise in stranded assets — property that loses value due to uninsurable climate risks — without intervention."

Political Economy Of Urbanisation During Climate Change

Why do Indian cities keep spreading into sensitive locations if severe weather is making real estate more erratic? Deep interconnectedness of real estate, politics, and speculative investment holds the key.

Projects sponsored by governments, such as Metro lines and motorways raise land values, which fuels fast urbanisation even in dangerous areas. Chennai's flooding problem was exacerbated when the OMR IT corridor turned wetlands into concrete projects. High-end homes in Bengaluru close to Bellandur lake have caused frequent waterlogging because of their disturbance of the drainage systems.

Through stamp fees, property taxes, and land sales, real estate also generates significant income for state governments, therefore providing a structural incentive for development. "It is difficult for legislators to resist the economic appeal of real estate," notes Sandeep Sinha, a senior urban governance specialist at the Centre for Policy Research (CPR). "But long-term urban resilience is being sacrificed for transient benefits."

Future Homes In Unknown Environments

The biggest unknown in real estate until recently was market fluctuation. Today, it is climate change. The notion of a desired home is changing, as Indian towns deal with climate-driven calamities. Environmental collapse, more than financial instability, will cause the dwellings people invest in now to be unusable in the next decades.

Re-evaluating real estate in the era of extreme weather calls for structural changes in urban design, government, and investment, rather than only personal decisions. In the absence of a climate-responsive strategy, India's cities run the danger of being areas of constant disaster, where homeownership becomes a problem rather than an advantage.

"Urban resilience must become the cornerstone of real estate development," said policy expert Ananya Bhattacharya of IIHS. "If we fail to act now, the cost will not just be financial — it will be existential."