CO₂ subsidies on construction investments in Switzerland, FHNW School of Business

The project examines how cantonal rent regulations and CO₂ subsidies influence construction investment in the residential sector. Using Geneva as an example, it analyzes whether climate protection incentives can offset regulatory barriers to investment – with implications for policymakers and institutional investors.

How do rent regulations and sustainability subsidies affect construction investment in the residential sector? Using the canton of Geneva as an example, this research project examines how regulatory interventions—in particular rent controls and licensing requirements—influence the investment decisions of institutional and private residential developers. The analysis is supplemented by consideration of CO₂ reduction subsidies and their potentially compensatory effect.

The study is based on a data-driven approach using vector autoregressive (VAR) models to identify causal relationships between regulatory shocks and investment behavior. For the first time, new construction and renovation investments are examined separately by investor type and correlated with regulatory indices. The results make an evidence-based contribution to the political debate on housing protection and climate targets and show differentiated effects on construction volume, return expectations, and market reactions.