This present thesis discusses how current environmental risks can affect the Real Estate market. In light of the increasing climate change, and of the magnitude of the risks it poses, understanding natural phenomena and their impact on the market is of extreme importance to local populations, market actors and policymakers. In 2024, Brazil experienced severe flooding events in the south of the country, in the state of Rio Grande do Sul, bringing incalculable damages to the region. The event was of national commotion, collecting resources for relief funds and organizations from all over the country. This paper investigates if these events and their widespread media attention were able to significantly increase public flood-risk awareness so to impact price dynamics in Real Estate. Using econometric analysis, mainly through the Hedonic Price Method (HPM) assisted by the ISO 31000 Risk Assessment Guidelines, the relationship between floods in the city of São Paulo and Real Estate prices is analyzed, to check if the alleged public awareness is enough to influence markets in unaffected areas by the 2024 floods. The goal is to provide urban planners, real estate investors, and policymakers with valuable insights regarding floods and their dynamics towards the market. As a result, it is concluded that São Paulo do penalize properties in floodable regions by −2.24% (5-year flood return period), −1.11% (25-year), and −5.93% (100-year) over the listed price. However, the flood event do not appear to have change the flood discounts applied to the studied properties, since the change in the discount, classified as Muted, did not present a clear pattern. Reasons, limitations and assumptions are discussed to guide future studies on how to perform the analysis, since these extreme events are meant to increase over time and further iterations could help further guidance to policymakers and market actors.
La presente tesi analizza come i rischi ambientali attuali possano influenzare il mercato immobiliare. Alla luce dell’intensificarsi del cambiamento climatico e dell’entità dei rischi che esso comporta, comprendere i fenomeni naturali e il loro impatto sul mercato è di importanza cruciale per le popolazioni locali, gli attori di mercato e i decisori pubblici. Nel 2024, il Brasile ha registrato gravi eventi alluvionali nel sud del Paese, nello Stato del Rio Grande do Sul, arrecando danni incalcolabili alla regione. L’evento ha suscitato una forte commozione nazionale, mobilitando raccolte di fondi e organizzazioni di soccorso in tutto il Paese. Questo lavoro indaga se tali eventi e la loro ampia copertura mediatica abbiano aumentato in modo significativo la consapevolezza pubblica del rischio alluvionale al punto da incidere sulle dinamiche di prezzo nel mercato immobiliare. Attraverso un’analisi econometrica, principalmente mediante il metodo dei prezzi edonici (HPM) supportato dalle linee guida ISO 31000 per la valutazione del rischio, si analizza la relazione tra il rischio di alluvione nella città di San Paolo e i prezzi immobiliari, per verificare se la presunta maggiore consapevolezza pubblica sia sufficiente a influenzare i mercati in aree non colpite dalle alluvioni del 2024. L’obiettivo è fornire a pianificatori urbani, investitori immobiliari e decisori pubblici indicazioni utili riguardo alle alluvioni e alle loro dinamiche di mercato. In esito, si conclude che a San Paolo gli immobili situati in aree allagabili scontano, rispetto al prezzo di annuncio, −2,24% (periodo di ritorno 5 anni), −1,11% (25 anni) e −5,93% (100 anni). Tuttavia, l’evento alluvionale non sembra aver modificato gli sconti applicati agli immobili studiati, poiché la variazione dello sconto, classificata come “Muted” (attenuata), non mostra un andamento chiaro. Vengono discusse motivazioni, limitazioni e assunzioni per orientare studi futuri su come condurre l’analisi, poiché tali eventi estremi sono destinati ad aumentare nel tempo e ulteriori iterazioni potranno offrire indicazioni aggiuntive ai decisori pubblici e agli operatori di mercato.
Natural disaster awareness as a price driver: an Analysis of the Impact of the 2024 floods in Brazil in the price dynamics of residential Real Estate in São Paulo
Machado Orlandi Couto Dafico, Thiago;SERRANO BARBOSA, ENZO
2024/2025
Abstract
This present thesis discusses how current environmental risks can affect the Real Estate market. In light of the increasing climate change, and of the magnitude of the risks it poses, understanding natural phenomena and their impact on the market is of extreme importance to local populations, market actors and policymakers. In 2024, Brazil experienced severe flooding events in the south of the country, in the state of Rio Grande do Sul, bringing incalculable damages to the region. The event was of national commotion, collecting resources for relief funds and organizations from all over the country. This paper investigates if these events and their widespread media attention were able to significantly increase public flood-risk awareness so to impact price dynamics in Real Estate. Using econometric analysis, mainly through the Hedonic Price Method (HPM) assisted by the ISO 31000 Risk Assessment Guidelines, the relationship between floods in the city of São Paulo and Real Estate prices is analyzed, to check if the alleged public awareness is enough to influence markets in unaffected areas by the 2024 floods. The goal is to provide urban planners, real estate investors, and policymakers with valuable insights regarding floods and their dynamics towards the market. As a result, it is concluded that São Paulo do penalize properties in floodable regions by −2.24% (5-year flood return period), −1.11% (25-year), and −5.93% (100-year) over the listed price. However, the flood event do not appear to have change the flood discounts applied to the studied properties, since the change in the discount, classified as Muted, did not present a clear pattern. Reasons, limitations and assumptions are discussed to guide future studies on how to perform the analysis, since these extreme events are meant to increase over time and further iterations could help further guidance to policymakers and market actors.| File | Dimensione | Formato | |
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https://hdl.handle.net/10589/243144