A model to investigate the impact of flooding on the vulnerability of value of commercial properties

Abstract

Flooding has the potential to have significant impact on the value of properties depending on the level of inherent vulnerability. Experts argue that it is not the actual risk but the perception of risk among property holders that influences vulnerability of value. The hypothesis that changing perception of flood risk could make property value vulnerable in the market is the main focus of the research. This dimension of research has received very low attention in commercial property literature.The existing knowledge base of flooding and property value reveals that focus has been largely associated with residential properties. Conceptual understanding of the extent and scale of the effect of flooding on the vulnerability of property value of commercial properties would be worthwhile for relevant stakeholders. The research methodology follows a quantitative approach with sequential application: of literature review, conceptual model generation, data collection from primary and secondary sources with remote questionnaire survey of selected study areas in the UK. The conceptual model was operationalised using analysis and interpretation of the collected data and finally cross validated with secondary data gained from commercial real estate experts . The strength of this research lies in the conceptualisation of the subject matter of property value in the context of flood vulnerability.This work provides innovative conceptual insight towards business vulnerability and vulnerability of value. The variables contributing towards vulnerability were hierarchically ranked using both collected data and deductive methods. The patterns of impact and recovery analysis emphasized that within the commercial sector indirect effects of flooding should be given equal importance with direct damages.The implication of perception on the vulnerability of property value showed a slightly different picture from business vulnerability in the chosen study areas when differentiated based on flood experience. In a nutshell the study reflected that the commercial property sector does not take flooding as one of their priorities. This is in part due to differential attitude towards risk of the population within the flood plain based on their knowledge and experience of flooding. The perception of stakeholders towards vulnerability of value can change with increasing magnitude and severity of floods and it is possible that the implications on market value of commercial properties will be visible in the future. Practitioners and researchers will find this study useful in developing an understanding of the vulnerability of commercial property value in the context of changing flood risk.