Oceanfront Short the Tail?

In many countries ocean front, or even better on the water is priced sky high above properties even slightly in the inland. Yes fantastic view (especially if some beach babes are swimming by). However to have your luxury apartment basically on the ocean will likely also expose you for a higher tail probability of getting washed out. No not washed out of the stock market, but washed out of your apartment by extreme weather. Is this priced into the beach property prices? I agree they should be priced up for their wonderful beach babe view, but also discounted by a higher risky rate due to higher tail risk than many inland estates.

The most prestigious old beach properties where typically placed on a cliff, close to ocean but still considerably above ocean, today on the ocean seems to be the hottest product.

Of course people that can afford mansions with beach view typically also have a nice house or two in the inland. However many living in luxury apartments on the ocean have probably put all their money (and the banks money) in a positive carry trade. They get stable high returns over an expected long period of time, in form of spectacular view etc. but they run a higher tail risk of getting washed out by that 200 year wave that actually happen every 50 years? due to fat-tails.

There was a article in Norwegian News paper today how regulators starts to rethink building projects on the ocean….of course after they recently observed some extreme weather and figured out their Gaussian models did not fit the data that well...

Going short a few apartments on the ocean and long an old mansion on the cliff with ocean view could be a good relative value spread trade (dollar neutral)! We need a better-developed real estate derivatives market.