Climate Series 6: Extreme weather events and sea level rise are threatening commercial businesses across Malaysia

Insights

3 minutes

18 May 2026

Extreme weather and extreme events – impacts on hospitality and property development

Climate change exacerbates the occurrence of extreme events, extremely high temperatures, occurrence of increasingly frequent flood events and general sea-level rise are expected to affect many key sectors of the Malaysian economy. See below how we can support you and your clients.

Case 1: Hospitality

Extreme events caused by climate change have the potential to significantly impact the hospitality sector in multiple ways:

  • Rising temperatures require greater energy expenditures to maintain cooling systems. The demand for cooling in Southeast Asia is projected to increase sixfold to 20501.
  • Degradation of natural attractions from extreme weather and flood events. Coastal tourist destinations, including Penang and Langkawi, have experienced increased flooding, coastal erosion, and coral bleaching, impacting their appeal to tourists2.
  • The floods3 across South-East Asia in late 2025 have damaged infrastructure, with hotels in Hat Yai expected to face business disruptions for the foreseeable future, and are disrupting travel across the region.

How we can support you:

  • Physical risk modelling
  • Parametric insurance for protection of natural attractions
     

Case 2: Property development

Malaysia, with 13% of its land area within 5km of the coast, is susceptible to sea level rise as well as flooding, risks that are expected to increase in frequency and severity as climate change progresses.

  • In 2024, the Natural Resources and Environmental Sustainability Minister in Malaysia said “It is expected that with the rise in sea levels, 111 towns and cities across the peninsula in Malaysia, particularly Penang, Selangor, Johor, Kedah, Melaka and Terengganu, will be affected.
  • Sea level rise exacerbates existing coastal impacts of climate change, including  coastal flooding, coastal inundation, coastal erosion, and saltwater intrusion. These impacts can result in the loss of physical property and damage coastal infrastructure, in addition to affecting the values of property and cost of insurance. Coastal flooding in Johor in 2006 and 2007 damaged an estimated RM 0.35 billion of infrastructure and incurred RM 2.4 billion of economic losses.

How we can support you:

  • Site or asset level physical flood modelling 
  • Advanced scenario analysis to see volatility in events
  • Advisory for resilience strategies for property in flood prone areas
  • Insurance solutions


     

1International Energy Agency, Southeast Asia Energy Outlook 2024
2IJRISS, Tourism Under Pressure: Analyzing the Impacts of Climate Change and Over-Tourism on Destinations
3The Rakyat Post, Malaysians Warned: Hat Yai Hotels Still Closed After Severe Flooding
 

Wave

How the Howden team can assist you

  • Help you understand your risks – both large scale and at asset level
  • Develop narrative-based scenarios for volatility events
  • Assess financial impacts from main perils
  • Find solutions for de-risking (technology overviews, mitigation actions, and their prioritisation)
Contact Us