In 2022, buildings in Switzerland contributed over 23% of the nation’s greenhouse gas emissions, and it is therefore becoming increasingly apparent that the sector is focused on for sustainability programs. Moreover, the country committed to decrease its greenhouse gas emissions 50% by 2030 and 90% by 2050. To this end, the following research questions have been established: 1. What are the implications of subsidies on the return of institutional real estate investors? 2. How do subsidies influence institutional investors' investments in renovation and new construction?

The main objective of this work is to analyze how cantonal public subsidies for sustainable renovation and construction affect institutional investors' actions, which are considered to have a positive effect. Based on the literature sustainability in Swiss real estate, a fixed panel regression model is established. In the end, the model’s results will be analyzed according to the effect of subsidies on both the returns and investment behavior. A summary will conclude the paper and give an overview for further research.

Regarding the relationship to return, the study has not been able to detect any statistically significant influence. As subsidized investments are not allowed to be further capitalized by increase in rent, the non-existent effect within the model seems reasonable. Within the model, there is a small, non-significant and comparatively neglectable negative relationship with the return on property prices, that contradicts existing literature examined outside Switzerland. Subsidies have been demonstrated to significantly boost investment activities (new investment, renovation investment). In absolute terms, new construction is influenced even stronger. Considering that average volume in new construction among the cantons was calculated as being six times higher, the effect on renovation is even stronger on a relative basis. Following the research questions, subsidies have been found to significantly positive impact institutional investors' investments in renovation and new construction.