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Risk-pricing in Swiss residential rents: why care about natural hazard risks if you do not own the property?

Author

Listed:
  • Floris Blok
  • Angelika Brändle
  • Ante Busic
  • Franz Fuerst
  • Marius Zumwald

Abstract

Using a hedonic regression, we examine the relationship between natural hazard exposure and residential rents using a sample of 18.339 dwellings in Switzerland. Hillslope debris flow and storm hazard are found to be associated with a significant discount across the study area. Flooding and surface runoff hazard are associated with significant discounts outside of urban areas, but results are inconsistent within urban areas. We explore some possible explanations for this finding. Results on the effect of avalanches, debris flow, landslides, hail and rockfall on rents are inconclusive. Exposure to heat is not associated with lower rents in Switzerland. Similarly, we find no evidence that increased exposure to flooding and surface runoff (in the form of living on the ground floor) is associated with lower rents relative to dwellings on higher floor levels. Furthermore, we find that the “MINERGIE” energy-efficiency rating is associated with a small premium depending on the general standard of the building.

Suggested Citation

  • Floris Blok & Angelika Brändle & Ante Busic & Franz Fuerst & Marius Zumwald, 2023. "Risk-pricing in Swiss residential rents: why care about natural hazard risks if you do not own the property?," ERES eres2023_258, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2023_258
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    More about this item

    Keywords

    Energy Efficiency; Hedonic Price Method; Natural hazards; Residential Rents;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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