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March 19, 2024

Affordable Housing: A Global Need Ripe with Opportunities

The necessity for housing, particularly affordable options, stands as a pivotal challenge in addressing societal needs across all regions of the globe. Affordable housing, defined as residences priced at or below market rates with consideration given to the area’s average household income, ensures that housing costs remain within 30% of the household’s total monthly income. UN-Habitat asserts that to accommodate an estimated three billion people requiring adequate housing by 2030, a daunting 96,000 new affordable homes must be built daily.

The African continent grapples with an acute housing shortage, totaling 56 million units, with over 90% falling into the affordable housing category, which would require a USD 1.4 trillion investment, excluding related infrastructure costs. Countries like Nigeria lack 28 million units, while Tanzania, DR Congo, Kenya, South Africa, and Madagascar are collectively short of 10 million, compounding the regional crisis. Accelerated population growth, poised to double by 2050, strains existing housing. Since 2000, Africa’s urban population has surged by 3.7%, welcoming over 500 million people and creating the largest total number of urban dwellers in the world. The African Development Bank deems 3.3 million affordable units necessary annually, yet supply falls short, creating a significant gap.

Meanwhile, in Southeast Asia, 200 million individuals live in informal settlements, signaling an urgent need for investment in affordable housing. Bridging the housing gap here requires an injection of USD 310 billion, with an annual investment of USD 70 billion to meet future demands. In the Philippines, the government aims to construct one million housing units annually from 2023 to 2028 to address the country’s housing shortage of more than 6.5 million units. Latin America and the Caribbean, already the most urbanized regions of emerging markets, anticipate a rise of the urban population to 89.0% by 2050 and a housing deficit estimated at more than 23 million homes, emphasizing the critical need for sustainable housing solutions to support the burgeoning urban populace.

Fortunately, various initiatives across the globe strive to alleviate housing shortages, with public-private partnerships burgeoning, evidenced by the $300 million investment platform between IFC and CITIC Construction, aimed at developing 30,000 affordable homes in Kenya and Nigeria over five years. Additionally, an issuance of $2.1bn social bonds by Chile and the world’s first sovereign social bond of $400mn by Ecuador, reflect a collective commitment to ensuring housing affordability for their citizens. Such collaborative efforts underscore the global resolve to address housing deficits and create opportunities for sustainable development while fostering economic prosperity and social well-being.

As urbanization accelerates in Latin America, Southeast Asia, and Africa, the demand for social and affordable housing becomes increasingly evident. Governments are aligning policies to address the housing deficit, while private companies work alongside them, collectively working to build and offer avenues for sustainable development. With concerted efforts, there is hope for a future where adequate housing is accessible to all, driving economic prosperity and fostering vibrant communities. At Delphos, we believe opportunities within the housing sector beckon, inviting contributions to transformative journeys towards inclusive and resilient urban landscapes.

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