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Economic Evaluation of Renovation in Socially Deprived Housing Estates: a case study from Malmö
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.
(English)Manuscript (preprint) (Other academic)
Abstract [en]

The purpose of this study, is to analyse the profitability of a strategy to increase the quality of housing in socially disadvantaged large housing estates. The primary issue is to identify costs affected by poor management and the estates‟ social condition. Based on case study material from a socially deprived area, detailed economic data is discussed and analysed. The empirical data indicates that it is profitable to have a clear and active housing management strategy. The results also show that dedicated landlords‟, need to spend more resources on property management as this has a very positive impact on the local community as whole. Although the future estimated company value after the renovation process were profitable, from an optimistic assumption there are difficulties in justifying large scale investment purely from a business perspective. These findings give a better understanding of possible issues and the housing company's work process to improve an area. The value of the study, from a practical perspective, is a deeper financial knowledge of problems and possibilities to stabilize these housing areas and to find sustainable work methods. From a research perspective, this provides economic information which can be used for comparative management studies.

Keyword [en]
Large housing estates, Socially disadvantaged, Economic valuations, Strategy, Sweden.
National Category
Economics and Business
URN: urn:nbn:se:kth:diva-48613OAI: diva2:458196
QS 2011Available from: 2011-11-22 Created: 2011-11-22 Last updated: 2011-11-22Bibliographically approved
In thesis
1. Organizational and economic aspects of housing management in deprived areas
Open this publication in new window or tab >>Organizational and economic aspects of housing management in deprived areas
2011 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation consists of five papers with different objectives. The overall objective is to improve knowledge of effective policies regarding socially deprived large housing estates. All studies deal with the real estate context from a housing company decision-making perspective. The first two papers focus on organisational issues and the following three papers deal with economic issues related to the development of a specific housing area. The research is based on case studies which involve specific methodologies such as interviews, direct observation and collecting data from company accounts.

The main message of this thesis is that landlord policies and resources spent on operation and maintenance contribute to local area development. It is also underlined that there is a need for a paradigm shift in Swedish housing, since the regulatory framework appeared to be inadequate. The experience from this study shows that many problems can be solved within the existing laws and through efficient customised property management, but landlords need more effective incentives to improve their policies further.

The first two papers address issues about how to organise local management resources in large housing estates. Three different functions were identified: customer service, (e.g. fault-reporting); the letting process; and caretaking (day-to-day management and control over indoor and outdoor areas). The models where more decisions are decentralised lead to better information about the local conditions, make it easier to coordinate work in an area, create more motivation for the staff and make it easier to involve the tenants. This was particularly valuable for socially deprived estates, but the decentralised model raised some moral hazard problems, e.g. the local team create their own agenda, are pressured by certain tenants to give them advantages and that the result is lack of control and consistent housing policy in the company.

The third paper deals with Corporate Social Responsibility (CSR) in housing management. Different types of costs are identified and related to the estates’ social condition. The results indicate that a CSR-based management policy leads to approximately 4.5 percent lower annual operation and maintenance costs which improved the company’s profitability, especially if the higher standard of maintenance, made higher rents possible. The study also identified three other benefits of CSR; improved tenant relationship, goodwill and business opportunities and the study is a first step towards a better understanding of the economic consequences of CSR in a real estate-context.

The fourth paper analyses the return of the Swedish slumlords, with a focus on a specific area in Malmö. The tenants stayed even though the rent was higher and the quality was lower than in neighbouring areas because of a combination of three factors; rents were paid by different forms of welfare payment, lack of alternatives because of queues to other areas and because some tenants saw an advantage in the “no questions” asked policy that the slumlord followed. It is further argued that the property owners found this slum strategy as profitable either because they hoped to find a “bigger fool” to sell to or because the decision makers in the company had not invested their own money. The study concludes that both tenants and investors were in the end losers, but not the company managers.The fifth paper is an economic evaluation of renovation in socially deprived housing estates. The empirical data indicates that it is profitable to use a clear and active housing management strategy, especially if the rent levels are affected by the standard of management by the landlord. The results also show that the landlord’s policy had positive social effects, both in the form of tenant welfare and in the form of lower costs for Police and the Fire department. The study also indicates that it can be difficult to justify large scale investment purely from a business perspective.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2011. 21 p.
, Trita-FOB-PHD, 2011:4
large housing estates, deprived areas, housing policies, economic valuation and local management organisation models
National Category
Economics and Business
urn:nbn:se:kth:diva-48616 (URN)978-91-85783-19-9 (ISBN)
Public defence
2011-12-01, F3, Lindstedtsvägen 26, KTH, Stockholm, 13:00 (English)
QC 20111122Available from: 2011-11-22 Created: 2011-11-22 Last updated: 2011-11-22Bibliographically approved

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