Does facility-maintenance service quality drive tenants’ willingness to pay higher rent? Evidence from Indian residential real estate infrastructure

Abstract

Purpose

This paper aims to empirically investigate the effect of facility–maintenance service quality on tenants’ satisfaction and their subsequent willingness to pay higher rent in the National Capital Region (NCR), India.

Design/methodology/approach

The data for this study was collected from 1,692 tenants in NCR, India. SmartPLS4.0 was used to analyze the data using structured equation modeling.

Findings

The study findings indicate that all parameters of facility–maintenance service quality (tangibles, service personnel quality and empathy) positively impact tenants’ satisfaction. Further, satisfied tenants are willing to pay higher rentals. In addition, customer satisfaction partially mediates the relationship between facility–maintenance service quality and willingness to pay higher rent.

Research limitations/implications

The study extends evidence-based research in the service industry to provide empirical evidence that facility–maintenance service quality positively impacts customer satisfaction in real estate settings in emerging markets (India). This research will guide future researchers to explore other dimensions to support evidence-based research in real estate settings.

Practical implications

Based on the data collected online after personal interaction in residents’ meetings, the study findings provide significant insights for stakeholders such as policymakers, practitioners, landlords, associations and builders. With rising housing demand because of rural migrations toward urban or metro locations coupled with the government’s inability to expand the infrastructure simultaneously, the government has enhanced the role of public–private partnership (PPP) in housing development. The findings will help policymakers incorporate the service angle into key performance indicators in PPP contracts. Additionally, with rising competition in the housing sector, understanding these factors will help landlords and resident associations improve service quality standards, thus enhancing the residential societies’ word-of-mouth publicity and attracting high-paying residents.

Originality/value

To the best of author’s knowledge, this is a pioneer study to empirically investigate the impact of facility–maintenance service quality standards on tenants’ satisfaction and willingness to pay higher rent in a residential setting in India.