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Study: Sustainability as a decisive investment criterion for institutional investors

In the context of the Paris Climate Agreement of 2015, Switzerland has set itself ambitious targets for reducing greenhouse gas emissions. As a result, sustainability has established itself as a key dimension and investment criterion in the investment process for institutional investors alongside traditional return and risk factors.

The sustainability megatrend has a strong impact on the real estate markets and on the portfolio allocations of institutional investors. With their existing properties, they are facing major challenges with regard to the transformation towards a sustainable real estate portfolio in order to avoid stranded assets1, driven on the one hand by increasing regulatory pressure and on the other hand by growing pressure from valuers who are increasingly using sustainable properties as benchmarks. This is resulting in a disruptive rethink in the industry and in real estate valuations - away from "green premiums", a revaluation for sustainable properties, and towards "brown discounts", a devaluation for properties that do not meet relevant sustainability requirements.

Irma Kessler, Consultant Real Estate Investment & Strategy, gets to the bottom of this phenomenon in her study "Sustainability and infrastructure in real estate portfolios". The study was conducted in 2022 in cooperation with Lucerne University of Applied Sciences and Arts and the Swiss Pension Fund Association ASIP and published by Springer Gabler. It provides valuable insights into the real estate-specific investment behavior of selected institutional investors in Switzerland and sheds light on current and future management challenges, trends and solutions in connection with investments in sustainable real estate.

Small and medium-sized pension funds have some catching up to do

Implementing sustainability in the real estate portfolio is a challenge

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Irma Kessler
Consultant Real Estate Investment & Strategy
irma.kessler@implenia.com Download VCF-Card Business card

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