Title: The impact of Consumer Price Index on Rental Properties

Level: Bachelor’s Thesis in Business Administration 

Authors: Melker Paver & Isak Rosberg

Examiner: Per Ola-Ulvenblad & Urban Österlund

Research question: 

·         How do real estate companies consider financial risk linked to rental properties of consumer price index? 

·         How do real estate companies manage risk when facing increased costs related to rental properties due to inflation and rising interest rates?

Purpose: The purpose of this thesis is to analyze and to gain an understanding of how private real estate companies consider and manage financial risk when costs increase due to consumer price index

Method: To accomplish the purpose of the thesis, the writers carried out a qualitive research together with an abductive research approach. The writers collected empirical data through the use of qualitative interviews with five private real estate companies.

Conclusion: By analyzing collected empirical data against the background of theory, a conclusion has been reached which shows that real estate companies consider risks in different ways, but that future growth is often affected. Flexibility in the property portfolio is an opportunity for the companies to diversify their risks. The maturity structure of the loans and the loan-to-value ratio are also areas of application that real estate companies use to take risk into account. Furthermore, the conclusion is that real estate companies manage risk through operational optimization. but that is not the easiest thing for real estate companies. This is because the tenants' association has not proven to facilitate the work of the real estate companies. 

Keywords: Real estate companies, financial risk, rental property, consumer price index, flexibility