The Low-Carbon Rent Premium of Residential Buildings

Item Type Monograph (Working Paper)
Abstract Based on 39,791 rental contracts from 2,438 residential properties in the Swiss real estate market, we study how a property’s CO2 emissions affect net rental values. We use a novel measure of operational carbon emissions which relies on various parameters related to the sustainability and energy efficiency of a building as well as climate conditions of its location. After controlling for a building’s state, its macro and micro location, local rental market conditions and various property or apartment characteristics in an extensive hedonic framework, our results suggest that apartments in low-carbon buildings have higher net rents. This effect is mainly driven by lower ancillary costs of sustainable apartments in contrast to tenants’ higher preferences for environmentally-friendly living. We underline this result by sample splits across urban and rural areas, warm and cold locations, as well as regions with a high and low share of people supporting a Federal Act for the Reduction of Greenhouse Gas Emissions in Switzerland. Based on 432 residential building transactions, we also show that low-carbon buildings have lower capitalization rates which translate into higher market values due to lower risk premiums.
Authors Brändle, Angelika; Füss, Roland; Schläpfer, Jörg & Weigand, Alois
Language English
Keywords CO2 Emissions, Energy Efficiency, Net Rents, Residential Buildings, Sustainability
Subjects business studies
HSG Classification contribution to scientific community
HSG Profile Area SOF - System-wide Risk in the Financial System
Date 21 June 2022
Publisher SoF HSG
Place of Publication School of Finance Working Paper Series
Volume 2022
Number 04
Number of Pages 34
Official URL
Contact Email Address
Depositing User Alois Weigand
Date Deposited 22 Jun 2022 08:13
Last Modified 29 Jul 2022 07:11


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Brändle, Angelika; Füss, Roland; Schläpfer, Jörg & Weigand, Alois: The Low-Carbon Rent Premium of Residential Buildings. , 2022, 04.

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