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Public housing companies’ tenants cannot afford market orientation

2018-10-15 

“Everything was good: they built eco-housing with nice green areas but no one could afford to move in,” says Zahra Ahmadi, researcher at the University of Gävle.

Zarah Ahmadi

Hard to take social responsibility

In 2011, new EU legislation was introduced which meant that public housing companies too need financial return on investment and, in a business-like manner, need to concentrate on making a profit in the housing market.

“Municipalities that used to financially aid public housing companies because the need for housing was big enough for them to calculate a loss when building new housing, now find themselves unable to do so, because every project should have financial return on investment,” Zahra Ahmadi says.

In her research, Zahra Ahmadi demonstrates how difficult it is for public housing companies to take their social responsibility while expected to concentrate on making a profit. Their tenants cannot afford to be customers on a free market, and, earlier, the public housing companies could take a greater social responsibility.

Tiled bathrooms and nice wallpaper

The public housing companies tried to become more attractive, for instance, by adding tiled bathrooms and nice wallpaper. Some public housing companies were successful in such ventures.

“It is very important that the companies know what people want, but it isn’t only about being innovative. One municipality tried to build ECO-housing with high standards, but the inhabitants could not afford to rent them.”

Public housing companies have believed that they are giving the customers what they want and creating high customer value has been the primary construction strategy, but they haven’t considered economic conditions. The economic conditions of each municipality are important when planning construction strategies.

Listen to the customers

Zahra points out that public housing companies need to listen to their customers’ needs and, above all, to what the customers can afford and adjust constructions strategies accordingly, for instance by choosing a lower standard.

“In the past, public housing companies have not had to listen to the market to a high degree, to what people can afford to pay. If they had, they may have waited with building something new. They do not listen hard enough. When I started looking at this situation, there were few empty flats in public housing companies, but now people are lining up for a place to live, so they can wait for the market,” Zahra Ahmadi says.


 

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Zahra Ahmadi defended her dissertation "The role of market orientation in public housing companies: a study of MO’s effect on construction strategies". on October 15.

External reviewer was Reader David Sörhammar, University of Stockholm and supervisor was Agneta Sundström, senior lecturer at the University of Gävle and Akmal Hyder professor at the University of Gävle and professor Björn Berggren KTH Royal Institute of Technology.

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För mer information, please contact:
Zahra Ahmadi, doctoral student in business administration at the University of Gävle
Tel: 070-181 12 48
Email: zahra.ahmadi@hig.se


Text: Douglas Öhrbom
Photo: Anna Sällberg

Published by: Douglas Öhrbom Page responsible: Veronica Liljeroth Updated: 2018-10-18
Högskolan i Gävle
www.hig.se
Box 801 76 GÄVLE
026-64 85 00 (växel)