1. Tenant satisfaction in housing real estate – an empirical analysis ERES 2009 – Doctoral Session 2.4 Jens Pozimski 24.07.2009

2. Seite 2 Table of Contents Introduction Data Description Database of a listed housing company Data from a questionnaire Research Design Tenant satisfaction in housing real estate– an empirical analysis

3. Seite 3 Introduction Former subject: determinantes of residence time The multiplicative inverse of residence time is fluctuation Results of fluctuation for the owner are direct costs: administration costs, (temporary) loss of rent appox. 2.000 – 2.500 Euro / dwelling indirect costs: refurbishment appox. 15.000 – 20.000 Euro / dwelling Purpose of business: maximise profits by optimising revenues and costs Which factors cause fluctuation (costs)? To what extent rent increase will affect fluctuation (revenues)? Tenant satisfaction in housing real estate– an empirical analysis

4. Seite 4 Introduction New subject: tenant satisfaction (satisfaction reduces fluctuation) What are the main drivers to enhance tenant satisfaction Rental fee Operating costs Quality of dwelling Rental space Tenant satisfaction in housing real estate– an empirical analysis

5. Seite 5 Data Database of a listed housing company with a stock of 35.000 dwellings in the southern part of Germany Start and end of the term of lease -> residence time Rental fee Local index rent (non-recoverable) operating costs Quality of flats Location Living space Number of rooms Tenant satisfaction in housing real estate– an empirical analysis

6. Seite 6 Data Data from a questionnaire. The Questionnaire includes data from the database Rental fee Local rent level (index rent) Operating costs Quality of the dwelling (cluster) Quality of the environment (cluster) Living space and number of rooms Tenant satisfaction in housing real estate– an empirical analysis

7. Seite 7 Data Data from a questionnaire. Questions: Level of satisfaction (1-6) – dependent variable What is the fair rental fee for this flat? How much are you willing to pay? Income of household What could be improved? Did the level of the comparable local rental fee surprise you? Tenant satisfaction in housing real estate– an empirical analysis

8. Seite 8 Data Data from a questionnaire. Does Satisfaction has an influence on residence time/fluctuation? Questions about changing the dwelling: Low satisfaction Rental fee Size Employment Personal or family reasons Other reasons Tenant satisfaction in housing real estate– an empirical analysis

9. Seite 9 Research Design Simple Regression Model Dependent variable (level of satisfaction) = α+β(1)*(rental fee)+β(2)*(affordability)+β(n)*(…)+E Building of clusters to reduce bias regarding the quality of dwellings regarding the location regarding the size of the dwelling Different specifications rental fee (absolute, relative to average rent of appartment complex, relative to local index rent) operating costs (absolute, relative to rental fee) Tenant satisfaction in housing real estate– an empirical analysis

10. Seite 10 Research Design Results of the regression Significant variables -> find a breakeven-equation to optimise the maximum profit using the obtained parameters from the regression max (P) -> R – C P = profit R = revenue (from rental income) C = Costs (operating costs, fluctuation costs) Tenant satisfaction in housing real estate– an empirical analysis