Decarbonizing Swiss Real Estate Funds: Quantifying Climate-Driven Obsolescence for a Net-Zero Future

Swiss real estate funds face growing pressure to reduce carbon emissions and achieve Switzerland’s ambitious net-zero target by 2050. Meeting this goal requires energy-efficient buildings and a transition away from fossil fuel-based heating systems. Understanding the current energetic state of these buildings is essential to align with climate commitments. This study introduces a systematic approach to quantifying climate-driven obsolescence within the building portfolios of Swiss real estate funds, providing a foundation for assessing the resources necessary to transition to an energy-efficient, low-carbon future. Leveraging a unique dataset from over 9,000 buildings across 40 funds listed in the SXI Broad Real Estate Index, we develop a methodology to evaluate obsolescence using thermal transmittance (U-values) of building components and heating system types. Using a weighted multivariate logistic function, buildings are categorized along a spectrum from “highly efficient” to “obsolete.” The ratings are consolidated at the fund level, enabling better comparability of the state of the building stock across funds. The findings reveal that the median age of buildings in Swiss REFs exceeds 40 years, indicating that a significant portion of the stock is entering the stage where energetic refurbishments are required. Energy inefficiencies are widespread: 85% of walls exceed permissible U-value thresholds, and over 70% of buildings rely on fossil fuel heating systems—significantly higher than the national residential average. Renovation rates remain below 1%, raising critical concerns about the feasibility of achieving net-zero goals. Geographic disparities exacerbate these challenges, with cantons such as Geneva and Vaud exhibiting disproportionately high reliance on oil heating. This research highlights the urgent need for targeted policy interventions and increased renovation activity to decarbonize the sector. The proposed methodology equips fund managers and policymakers with tools to benchmark energy performance, prioritize renovations, and strategically align portfolios with Switzerland’s net-zero objectives.