Anticipating real estate value in the era of climate regulations

Source: https://wp.unil.ch/hecoutreach/anticipating-real-estate-value-in-the-era-of-climate-regulations/ Parent: https://www.unil.ch/hec/en/home/menuinst/faculte/presentation/medias.html

As climate and energy regulations become stricter in Switzerland, one question arises: what is the real value of a building today if costly renovations will be legally required tomorrow ? Research conducted by Eric Jondeau (HEC Lausanne) and Alexandre Pauli (E4S–EPFL), in collaboration with E4S, proposes rethinking real estate value through a financial lens applied to climate transition risks – offering practical insights for investors, property owners and policymakers navigating an evolving regulatory landscape.

The researchers have developed a financial tool capable of anticipating how future energy renovation requirements may already affect a property’s value today. Their work reframes green value not as a sustainability premium, but as a reduction in future financial risk – by integrating tomorrow’s regulatory constraints and costs into today’s valuation.

Their findings show that buildings exposed to higher future regulatory costs and uncertainty already carry a measurable discount today, highlighting how climate policy is progressively reshaping real estate valuation.

This research is available on E4S platform. An interview with the researchers also provides more detail on the methodology and its practical implications.