Urban Heat Islands – The Impact of Heat Stress on Housing Prices in Berlin

Anna Knoppik, Felix Weinel, Sebastian Leutner, Marcelo Cajias and Wolfgang Schäfers

ERES from European Real Estate Society (ERES)

Abstract: Global climate change is leading to rising temperatures and has numerous ecological consequences, such as heatwaves, droughts, and heavy rainfall. Urbanization further exacerbates the climate crisis as the density of buildings and the extensive sealing is leading to a substantial increase in temperature in urban areas. The paper aims to examine whether the phenomenon of the so-called Urban Heat Island (UHI) has an impact on property prices and whether temperature fluctuations affect price trends in one of the most densely populated cities in Europe, Berlin. For the evaluation, daily temperatures on a 30-metre by 30-metre grid are considered from 2014 to 2023. The corresponding UHIs are conducted on the basis of the relative temperature differences between the location of a property and the overall mean temperature of the sample. Within a semi-parametric model, non-linear relationships between variables are permitted, enabling an in-depth analysis of meteorological data and property information. The results reveal that temperature differences, particularly at night, have a significant impact on real estate prices in Berlin. This highlights that in the context of urbanisation, UHI has become a relevant issue in both economic and urban planning approaches.

Keywords: Climate Risk; Generalized Additive Model; Residential Real Estate; Urban Heat Islands (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2025_146

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