Jens Hirsch

Assessment of climatic risks for real estate

Purpose – The purpose of this paper is to investigate the functionality and main results of the ImmoRisk tool. The aim of the project of the Federal Ministry for Transport, Building and Urban Development (BMVBS), in corporation with the Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR), was to develop a user-friendly tool that provides a sound basis with respect to the risk situation caused by extreme weather events. Design/methodology/approach – The tool calculates the annual expected losses (AEL) for different types of extreme weather hazard and the damage rate as the proportion of AEL on building value, based on a trinomial approach: natural hazard, vulnerability and the value of the property. Findings – The paper provides property-specific risk profiles of both the present and future risk situation caused by various extreme weather events. Research limitations/implications – The approach described in the paper can serve as a model for the realization of subsequen...

How flood risk impacts residential rents and property prices: Empirical analysis of a German property market

The purpose of this paper is to quantify the impact of 100-year flood risk on both property rents and values in Germany, exemplified by the market of the historic city of Regensburg, and therefore supports investors in understanding market behavior patterns in both rental and investment context.,The authors construct two generalized additive models for rents and purchasing prices with spatial components and under inclusion of both typical property characteristics (as control variables) and a 100-year flood risk parameter in order to estimate its effect on the rents and property price structure. The authors apply the methodology to a four-year data set of more than 16,500 observations.,The analysis shows that flood risk is a highly significant parameter when estimating both the rent as well as the sales price model. The authors also find that purchase prices for one square meter of living area are, on average, EUR299 lower if the property is located in the flood risk zone. In addition, also rental markets come with a respective, but rather low, discount.,The authors provide transparency to investors in terms of the impact that a flood risk location has on property rents as well as purchasing prices. The study supports investors by providing evidence on reaction patterns in German real estate markets and helps quantifying the financial impact that comes with flood risk in Germany.,This is the first study that aims to empirically test and to quantify the impact of flood risk on property rents and purchasing prices in Germany. Related research has been performed for the USA, Ireland and New Zealand and largely refers to event-driven work or rather conceptual in the context of property valuation.

Does ‘clean’ pay off? Integrating heating technology in hedonic pricing models

Comprehensive research has dealt with the question whether property markets show price premiums for buildings that feature ‘green’ characteristics such as low energy consumption or a building certification. We expand existing research by raising and answering the question if housing properties that were explicitly advertised to feature ? ‘green’ ceating technology based on renewable energies or ‘brown’ heating technology based on fossil energies or even obsolescent technology come with significant price differences in association with these technological differences. For this purpose, we perform large-sample geoadditive regression analyses on the basis of a private dataset, which originally contains more than 3 million raw observations from German residential properties of 2015. We indeed find significant impact on housing prices, which is specifically visible in the form of a ‘brown’ discount for properties that are powered by fossil-fueled energy systems. From our findings, we suggest that low-energy consumption levels may still lead to price discounts c.p. if it is caused by mainly building-related quality and system-related measures stay unperformed.

Energy efficiency: Behavioural effects of occupants and the role of refurbishment for European office buildings

Abstract Energy consumption in office buildings is determined partly by fixed building characteristics, but also by the behaviour of occupants. Within the European Union, office buildings have become subject to more stringent energy efficiency regulation for new construction or extensive refurbishment, with the aim to reduce energy consumption and carbon emissions. The study determines the influence of physical building characteristics and occupant behaviour on energy consumption, and in particular, the role of refurbishment in different intensities on energy consumption is investigated. The data-set of the Green Rating Alliance is tested to provide evidence, by applying multiple regression models for energy consumption. The results highlight considerably increased energy consumption of single-tenant compared to multi-tenant office buildings. Very large office buildings consume significantly more energy per square metre that their smaller peers. A building’s modelled water consumption turns out to be a good indicator for the actual energy consumption, emphasising the importance of assessing further sustainability measures. Overall, buildings of higher age turn out to be of lower energy consumption, pointing to additional appliances and equipment in more recent buildings, to provide better services and more comfort. In general, extensive refurbishment measures account for significant higher energy use, since the overall quality of the buildings is improved with additional appliances and equipment. Testing for the interaction effect between building age and refurbishment, the results demonstrate significantly lower additional energy consumption for buildings with more recent extensive refurbishment, compared to those with refurbishment several years ago. However, the results need to be considered with precaution against deriving firm conclusions due to the small sample size and some drawbacks in the applied data-set.

The analysis of customer density, tenant placement and coupling inside a shopping centre with GIS

Abstract The spatial arrangement of tenants is currently one of the main topics in shopping centre research. This paper shows how a Geographic Information System (GIS) can be used to analyse the tenant structure. Given the recommendations in the literature, the analysis may help to improve the situation within a certain shopping centre. Therefore, we introduce the variable clumping method and kernel density estimation into shopping centre research in order to analyse retail category concentrations, customer flows and coupling in a shopping centre. Applying these techniques to a German shopping centre showed that spatial concentration can be observed within the retail categories of food, health & body and fashion and that the pass ratio declines according to the distance from the central point of the shopping centre. Also, shops in the same retail category have higher coupling than those of different categories, and unexpectedly spatially separated shops have a slightly higher coupling than non-spatially separated ones. Overall, the use of GIS improves the quality and the speed of spatially based analysis, and thus should be used more frequently in scientific shopping centre research and shopping centre management.

Climate Change Risk Awareness in the Property Sector: Australia

Worldwide between 2000 and 2014 disaster impacts triggered

Does “clean” pay off? Housing markets and their perception of heating technology

US2.3 trillion in damage with less than 30% insured (Munich RE, 2015), this affected 2.9 billion people and killed 1.2 million people between 2000 and 2012 (UNISDR, 2013). The property sector is not immune to risks associated with natural disasters or extreme weather events. Climate change and the implications of increased extreme weather events, severe temperature durations and sea level rise have a detrimental, immediate and significant impact on property. Property is not only a component of providing shelter to all inhabitants of Australia or a workplace; property is major industry sector within Australia, currently employing more than the mining and resources sector (PCA, 2015). Consequently, increasing catastrophic events as a result of Climate Change will have a substantial impact on the property sector financially, physically and socially. Furthermore sea level rise will affect many Australian cities, in particular Victoria is highly exposed with between 31,000 – 48,000 residential buildings, 1,500 – 2,000 commercial properties and 600 – 1,000 light industrial properties and major infrastructure like 3,500km of roads and 125km of rail at risk of inundation from sea level rise (Department of the Environment, 2011). The financial cost implications for property is only going to escalate, as populations grow, a larger percentage of property - residential, commercial, infrastructure situated in cities will be at risk and the incidence of events will exacerbate the economic and social impact. Property owners need to put in place mitigation and adaption strategies now in order to cope physically, financially and socially with the changes to come, however, at present the industry is currently unaware of the extent of the risks posed to property. Consequently, the development of a value based risk assessment tool is required to enable property owners, occupiers and professional the ability to understand the risks posed by Climate Change and the subsequent effects on property in the Australian environment. This paper reports on the development of a risk assessment tool in the Australian environment.