Investments in rental apartments - The case of Malmoe

Abstract: The municipality of Malmoe has a housing deficit equal to 14 000 homes. The deficit is most significant for affordable rental apartments in the old stock. Long queues and excess demand makes it difficult for individuals who are not established on the housing market to find a home of their own. To overcome the situation a government inquiry concluded that the rental sector must see more private investments, because if it would be more profitable to invest in rental buildings the market would solve the housing shortage. The inquiry bases their conclusion on a common understanding of investments as something implicitly good and beneficial for all, but it is questionable if that is always the case. Therefore, the purpose with this thesis is to problematize investments made in Malmoe’s rental sector. A theory developed by Andrew Sayer is used to separate and structure different investment objectives. The theory distinguishes between (1) object-oriented investments and (2) investor-oriented investments. Invetsment (1) focus primarily on the object while investment (2) focus on the potential economic gain that could come from trading with the object. From Sayer's theoretical distinction, two research questions are formulated to examine the case of Malmoe. How can different objectives be associated with either investment (1) or (2)? How do these different investment objectives, (1) and (2), effect Malmoe’s rental market? To answer the questions officials from six of the major rental housing companies in Malmoe have been interviewed. The officials represent companies with a total share of 52 percent of the rental market in Malmoe. Investor-oriented investments are of prior concern for five of the six companies. The exception is a company owned by its members, which is primarily object-oriented in its investments. The companies invest in building, additional construction, acquisition of already existing houses, and development. Building and additional construction are productive ways to earn an income since it adds use-value (dwellings) to the market. Contrary to this, the profits made from acquisition and development does not derive from production of dwellings but from the trade and development of already existing assets. An example of this is how an attractive development strategy, for acquired rental property, is to renovate it in rent-maximizing manner because there is a demand and it generates profits. However, the transformation of affordable flats into expensive top-level apartments does not improve conditions for those who need an affordable house in Malmoe.