Under the current climate change scenarios, Switzerland’s real estate sector faces significant exposure to natural hazards, with floods alone causing more than CHF 15 billion in damages over the past 50 years. Despite growing urgency around climate risk management, little is known about Swiss real estate funds’ (REFs) flood exposure. This study addresses that gap by analyzing river and pluvial flood risks using detailed portfolio data on more than 9,000 properties combined with granular climate-related flood risk information. Our estimates show that less than 6% of properties are at risk of pluvial and river flooding. Large funds exhibit relatively low flood risk, while several smaller funds may face significant vulnerabilities. Swiss REFs hold most of their properties in cantons such as Zürich and Vaud, where flood exposure is minimal, while holdings in Geneva, Basel, and Ticino face heightened risks. The regression analysis reveals relevant associations: Funds investing near their headquarters and those holding geographically diversified portfolios tend to have lower climate-related flood exposure. Finally, using building-level risk and price data, we demonstrate that flood risks significantly affect the values of properties held by Swiss REFs. These insights underscore the need for Swiss REFs to prioritize climate-related flood risk assessments in their long-term strategies.
Orpiszewski et al. (Tue,) studied this question.