Sande, Joris van de (2023) The relationship between physical climate risks and real estate values. Master thesis.
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Abstract
The climate around the world is changing. Climate change and the associated risks are increasing for real estate. Therefore, the following research question is examined: “To what extent can a relationship be observed between physical climate risks and the value of real estate?”. This study uses a unique dataset of 12.213 commercial real estate properties in different segments in the Netherlands, provided by ING Real Estate Finance and Bluelabel. Using a hedonic model, the main findings show that properties with higher rents per square meter are located in areas in high risk areas in terms of drought, heat stress, and pluvial floods are positively correlated with higher rents per square meter. The difference between low and high risks areas for drought is 6.54%, heat stress is 5.02%, and pluvial flood is 7.86%. Fluvial flood has a significant negative correlation with the rent per square meter. A property in an area with high risk has, on average, 7.21% lower rents per square meter in comparison to a property in a low risk area. In addition, using a Chow test, the findings in this paper reveal that the residential and non-residential properties have a significantly different correlation with the physical climate risks. This paper creates the foundation for research into these physical climate risks that increasingly impact the way of living and the value of real estate in the Netherlands. Therefore, this paper should be used as a first start in examining these climate risks and their influence on rent per square meter.
| Item Type: | Thesis (Master) |
|---|---|
| Degree programme: | Real Estate Studies |
| Supervisor: | Vlist, A.J. van der and Duijn, M. van |
| Date Deposited: | 01 Mar 2023 08:27 |
| Last Modified: | 01 Mar 2023 08:27 |
| URI: | https://frw.studenttheses.ub.rug.nl/id/eprint/4151 |
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