UN Secretary-General António Guterres has warned that "El Niño conditions will pour fuel on the fire of a warming world. Impacts will hit even harder, travel even farther, and cross borders with devastating speed." The World Meteorological Organization has confirmed an 80% likelihood of El Niño conditions emerging between June and August 2026.

El Niño occurs every two to seven years when sea surface temperatures in the central and eastern Pacific rise significantly above average, reshaping atmospheric circulation and weather patterns globally. This cycle arrives following the warmest years in recorded history and already elevated ocean temperatures, meaning its impacts could be amplified considerably. The last El Niño in 2023–24 contributed to 2024 becoming the hottest year ever measured.

All real estate feels the impact of extreme heat. In residential buildings, prolonged high temperatures create health risks for occupants. In offices and logistics spaces, productivity declines as heat rises. Air conditioning offers only a partial solution. The hotter it gets the harder systems must work, increasing energy consumption and greenhouse gas emissions, only furthering the problem.

Large urban centres are particularly vulnerable. Higher densities of people and concrete create urban heat islands, pushing city temperatures 5 -10°C above surrounding areas. This isn’t just an environmental issue; it’s a financial one. Research from Dartmouth College found that the 1997–98 El Niño alone caused a US$5.7 trillion loss to the global economy over the following five years. Investors and occupiers are increasingly factoring climate exposure into their decision-making processes, and properties in heat vulnerable locations face growing scrutiny.

Cities on the front line of heat resilience

Cities are responding by implementing heat mitigation measures. Los Angeles and Phoenix, for example, have adopted heat reflecting grey coatings on roads and pavements, reducing surface temperatures by up to 9°C. In Medellín, Colombia, the "Corredores Verdes" (green corridors) three-year programme planted 65 hectares of greenery, including 12,500 trees and over 90,000 plants, across the city, resulting in temperatures reducing up to 10°C in treated areas, alongside improving air quality.

Short-term responses are also critical, particularly given El Niño’s imminent impacts. Temporarily reducing traffic volumes or implementing “Cool Islands” for residents to shelter in during heatwaves, as seen in Paris as part of the French national Heat Health Watch Warning System, may help the heat’s immediate effects.

Interventions like these don’t just improve quality of life, they also protect asset value. Excessive heat physically degrades building materials, increases maintenance cycles and pushes away potential occupants. For owners, the consequences range from costly retrofits to potentially stranded assets.

However, individual building measures can only go so far. Large scale, city-wide projects coordinated by local government, developers and the private sector represent the most effective route to ensuring both asset and city level resilience. For investors, climate adaptation is no longer a sustainability nice to have, but a core component of long-term value preservation.

Beyond heat: broader climate risks ahead

Rising temperatures are only one dimension of El Niño's impact. Some regions face heightened flood risk, others wildfires, and many a combination of cascading climate hazards. What connects all of these threats is a single imperative: the cities and assets that invest in adaptation now will be the ones that outperform over the next decade. With El Niño likely approaching, the window for preparation is narrowing. But the opportunity for real estate to lead on resilience has never been greater.

Further information

Contact Connor Chilton