The Developing World Affordable Housing Myth

Written by on March 23, 2012 in Central America, Featured, Green, South America, World - 2 Comments

By this time tomorrow, based on UN statistics, there will be another 97,068 base of the pyramid housing units needed somewhere on the planet and the poorest cities will have become even further crammed with slums and other forms of insalubrious living conditions.  Meanwhile, whilst the issue should be prioritised in terms of ensuring global sustainability, advancement will have also continued to remain on the backburner of policy making accompanied by widespread apathetic excuses of unfeasibility by governments and other international bodies.

Looking at the current economics of real estate development, progress is indeed a challenge: conventional construction methodologies often result in high input costs which, combined with ongoing land inflation pressures, force open market values to move beyond the reach of those most in need.  The result is not only increasingly isolated middle-upper income markets but also the creation of selfishly elitist urban environments where, for example, prime land where slums are often located is “grabbed” without any recourse or protection.

What also brings concern is the public smokescreen behind the real market behaviour of many developers and stakeholders – with projects often also being supported financially by prominent global institutions who falsely claim to have a focused mandate on social and environmental sustainability. For instance, serving the “growing middle classes” is a common marketing maxim of the international real estate development sector – yet a closer look at end pricing structures invariably indicates that those even at the top of the base of the pyramid (TBoP) have very little chance of acquiring such housing.  Another misleading strategy is the “mixed use” developments of low and middle income housing located together, where certain planning stipulations are often incorporated to get projects officially approved rather than to provide real solutions.

Then there are the ill-conceived and half baked politically led initiatives to eliminate housing deficits which, in addition to being unable to curb external market pressures, have come under increased fire amongst accusations of corruption and poor administration with some arguing that situations have actually worsened.  For example, take the “Minha Casa, Minha Vida” and “INFONAVIT” affordable housing initiatives in Brazil and Mexico respectively where the majority of stock being delivered to the target demographic is single-storey, small, of low standard finishing and inconveniently located.

This leads on to a further point about the quality / cost trade-off whereby assumptions have been made that those at the bottom of the pyramid simply cannot access dignified housing due to having low incomes which, in turn, has led to rising dialogue amongst NGO and impact investing circles of the need to push the housing microfinance industry forward (as such loan structures are the only ones deemed affordable).  Subjectively speaking, this indirect acceptance of slums as part of the future carries huge business and practical risks given the already over-burdened state of developing world cities and the impending magnitude of slum growth.

To round up, perhaps the most important attitude for sector stakeholders to embrace is that, although the task is immense, a world without slums is possible.   The provision of good quality and well-located homes with complementary infrastructure must cease to be compartmentalised for the wealthy – failure to not do so is guaranteed to spell disaster, creating wide-scaled urban socio-economic instability and serious global security risks from a number of perspectives.

As well as running the Habitation for the Planet blog, Ruban Selvanayagam is a base of the pyramid housing developer and international relations director at the Fez Tá Pronto Construction System© – a unique real estate development model which genuinely and effectively confronts many of the issues above.  

Ruban

Ruban Selvanayagam is the partner-director at the Fez Tá Pronto Construction System – http://www.feztapronto.com/ – a patented, copyrighted and fully consolidated real estate development model focused on serving the base of the pyramid with genuinely affordable, high quality, technically adherent and ecologically friendly housing. Please also see his regularly updated Habitation for the Planet blog – http://www.habitationfortheplanet.org/blog/ – with articles, interviews and relevant research into the global base of the pyramid housing sector.

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  • http://www.whathouse.co.uk/new-homes-search?keys=cambridgeshire Fleur – What House?

    I don’t know why it seems to be beyond the reach of countries, Governments and authorities to provide affordable housing to those that need it the most. Land is going to get more and more precious and restricted, especially in the most populated cities in the world. A global agreement on how to tackle this issue is needed now, because land is only going to become more of a premium so the land-grabbing strategies employed with get worse and possibly more corrupt and based on the highest price.

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