The impending risks of funding developing world community housing projects

 

Ruban Selvanayagam

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Ruban Selvanayagam

Despite being unable to completely brush off the effects of the global crises, several major developing and emerging world real estate sectors have been making noticeable strides in recent years. Yet paradoxically, the unprecedented high level of demand for base of the pyramid housing in these countries persistently fails to attract even the market-leading construction companies who have the benefits of scale, capital backing and influential positioning – invariably due to a lack of project viability (high costs and low sales values, producing negligible margins). Those that report that they actively serve the sector are often, in reality, catering to a higher-end demographic or heavily compromising on quality standards and/or location to produce business models that work.

Therefore, what largely remains are the local low- or non-profit community-led organisations whose efforts may be combined with some external assistance from both national and international NGOs, such as when a major debilitating event occurs. However, with this broad sector structure presiding over the future of global affordable housing and urbanisation, there is little cause for comfort – particularly when considering what looks set to be a rapid intensification of slum presence (doubling by 2030) combined with the noticeably rising incidence of natural disasters, predominantly affecting those already living in highly vulnerable circumstances.

There are a number of key arguments that can be made with regards to the major shortcomings of community housing initiatives. With widening financial restraints on donation supply and other grant-giving mechanisms combined with market inflationary pressures, the ability to introduce universally acceptable models that can effectively incorporate the fundamental principles of good housing construction has become difficult. As a result of limited budgets, methodologies used by community developers are highly questionable – particularly from technical and engineering perspectives. The final housing product in the majority is very basic, utilising inferior-quality materials within unproductive and small-scaled building systems that do not have the real ability to stand the test of time nor provide any measurable asset value. Other challenges include complications related to relying on volunteer assistance, the lack of control over project management and the rising number of ill-conceived projects that fail to achieve desired intentions.

Abandoning these development strategies is of course not what is being suggested here – local skill sets and a spirit of integration, for example, are paramount factors involved in successful housing projects. Despite growing reports of housing aid misallocation in recent years, the necessary drive and focused momentum for genuine transformation is also achieved more effectively by those with ground-level experience who are able to bring an unmatched ability to tackle the most pressing issues.

Whilst justifications may be made that current community housing approaches provide the best possible solution in what are tough circumstances and should be viewed subjectively from the point of view of the recipient, such standpoints as a basis for moving forward are fundamentally short-sighted and risky given the impending magnitude of slum growth. The goal and due responsibility of the base of the pyramid housing sector must be to work towards universally acceptable qualitative standards that are not only considerate of true necessities but are also able to move beyond ‘stop gap’ solutions that negate what needs to be a tool of empowerment, equality and true opportunity. However, with the rationale of providing every base of the pyramid citizen with a good-quality home to standards in line with the developed world frequently being shrugged off as an impossibility, such objectives will only be achievable if there is primarily a radical transformation of mainstream sector mindsets.

Ruban Selvanayagam is a base of the pyramid housing developer /investment advisor based in Brazil

Tagged in: Base of the pyramid global development Housing Social investment


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