New findings from 45,000 building permits
With its new white paper, the Center for Risk Management at HEC Lausanne (CRML) provides precise insights into the Swiss real estate industry's progress towards climate neutrality. By evaluating over 45,000 building permits in 2024, it becomes clear where the industry is already making progress and where there is still a considerable need for action.
The white paper “Retrofitting the Future, The Costs, Timelines, and Strategies Shaping Swiss Real Estate”, which was produced in collaboration with E4S, combines comprehensive data analyses with practical recommendations for action. The aim is to paint a realistic picture of renovation activity in Switzerland. The researchers have systematically investigated the dynamics of renovations, both in terms of speed and costs as well as the type of projects.
Findings from 45,000 building permits
By analyzing more than 45,000 building permits issued, the report provides a detailed overview of the actual pace of renovation in Switzerland for the first time. The results show that positive trends are definitely emerging. At the same time, however, it is clear that only a small proportion of renovations are directly aimed at improving energy efficiency. This means that the transition to more climate-friendly buildings has so far remained incomplete.
Strategic importance of real estate funds
A central aspect of the report is the role of real estate investment vehicles (REIVs) in achieving the climate targets by 2050. In order to achieve these targets, REIVs must mobilize an average of 13 percent of their net assets, or CHF 28.3 billion, for energy improvements. However, the study points to major differences between the individual market players when it comes to implementing these investments. Some will have to go far beyond the average requirement.
New tools for well-founded decisions
The white paper is part of a series of CRML initiatives designed to provide decision-makers with a solid data basis.
PRESS Scoresa comprehensive ESG rating system for over 126 Swiss real estate funds that takes environmental and social criteria into account.
PRESS Index: The first sustainable stock market index based on ESG performance metrics, creating transparency in the real estate sector.
ES Score Whitepaper: An in-depth analysis of 20,000 buildings managed by REIVs to identify regional differences and prioritize investments.
These tools have a common goal, they make change in the real estate sector measurable and highlight areas for action that often remain hidden. This creates a basis on which decision-makers can not only react, but also proactively steer.
Focus on future-oriented strategies
“By combining current data and project typologies, we can move from a theoretical and retrospective view to a concrete and prospective reading of ongoing changes,” explains Dr. Nathan Delacrétaz, one of the authors of the report. Together with his colleagues, Professors Eric Jondeau and Fabio Alessandrini, he makes it clear that it is not enough to simply manage the status quo for existing buildings.
The researchers emphasize that REIVs will have to focus more on three strategic approaches in future: adapting their portfolios through targeted acquisitions and sales, renovating existing buildings and developing new, energy-efficient properties. The targeted upgrading of underperforming properties will also play a key role in improving the sector’s energy balance in the long term.
Quantitative basis for the real estate turnaround
The white paper provides a rare insight into the actual dynamics of renovation and construction activities in Switzerland. It makes it clear that building permits are a key indicator of progress towards climate neutrality, but also a warning. Only if these renovations are specifically geared towards energy efficiency and climate neutrality can the targets set be achieved.