Housing for All India June 2011 Newsletter

thePLATFORM A NEWSLETTER FROM HFA INDIA | JUNE 2011

LAYING A FOUNDATION FOR AFFORDABLE HOUSING ACROSS INDIA In 2008, Ashoka’s Full Economic Citizenship initiative launched Housing for All (HFA) in India. Across India there exists a tremendous need for new housing that provides legal land rights, durable homes, and access to basic services such as water, electricity and sanitation for low income populations. Ashoka’s HFA initiative intends to address the needs of this socioeconomic group while demonstrating the cross-sector profitability of doing so.

market research collected by Ashoka’s HFA team and working closely with CSOs, developers understood the real demand for sub-INR10 lakh housing and the potential for turning a profit while serving lowincome households. In Ahmedabad, developers sold 1,800 units in nine months to low-income customers through partnerships with CSOs. CSOs meanwhile can advocate for better design and service for their clients and get paid for their expertise and work.

Starting in Ahmedabad and working with citizen sector organizations (CSOs) SAATH and SEWA, Ashoka’s HFA team brokered the first agreement between a developer and a CSO in September 2008. After seeing

In Ahmedebad we helped demonstrate that affordable housing can profit all stakeholders—over the next three years, with partners across the country, we hope to replicate this success in fifteen Indian cities.

thePLATFORM | June 2011 | Volume 1 Issue 1 | hfaindia@ashoka.org

spotlight on

SATARA

ashoka’s first HFA entrepreneur

AbHilash Nambudiri

After successfully enabling partnerships to construct pilot projects for affordable housing in Ahmedabad, Housing for All developed a strategy to quickly scale up efforts to create 15 similar projects in 15 cities. A new project in Satara is the first actionable project of this upscaling effort.

Satara, a city110km South of Pune, is home to many small-scale industries. Satara is also home to an estimated 57,000 potential customers that are interested in and financially able to afford sub-10 lakh homes. HFA conducted a survey covering 1000 targeted householdswith an income range of INR 8,000-15,000 per month (≈US$178-US$335) in Satara. A major proportion of those surveyed work in the informal economy as entrepreneurs and have stable incomes. Over 45% of surveyed households indicated the ability to pay a down payment in the range of INR 25,000 to 40,000 (~US$555 to $890). These numbers suggest a huge market opportunity for affordable housing in Satara— an opportunity our local HFA Entrepreneur is excited to turn into a city-wide effort toward the provision of affordable housing.

There is more to come... Satara is just one city in HFA India’s plan to target 15 cities over the next three years, in partnership with new HFA Entrepreneurs, to jump-start a nation-wide push toward afforable Housing for All across India.

Abhilash Nambudiri is our first HFA Entrepreneur, playing Ashoka’s convener role in affordable housing projects using the Hybrid Value Chain model.

HFA Entrepreneurs like Abhilash will market the benefits of affordable housing, create partnerships with developers and CSOs, and work with banks to supply housing loans to informal sector workers. He is currently administering the development of 690 houses in two affordable housing projects in Pune and Satara. He is now planning to expand his work to the state of Maharashtra and the Northern region.

“A partnership between a citizen sector organization and a developer is something entirely new to both actors. In order to be successful, the relationship has to rely on trust.This is where my role comes into play—I need to create that common ground.”

-Abhilash Nambudiri

HFA India - Satara Project Details Accelerator Entrepreneur Developer Civil Sector Organization Housing Finance Plot Size Number of Homes Selling Price Unit Sizes

Minimum Percentage of Low Income Customers Launch

Abhilash Nambudiri Aarya Infrastructure MannDeshi Foundation MannDeshi Foundation, Corporation Bank, Shubham Housing Finance 3.5 acres 500 Between INR 5 lakhs to INR 8.75 lakhs (~US$11,111 to US$19,445) 1 Rm-Kitchen (285sq-ft), 1 Rm-Hall-Kitchen (375sq-ft), and 2 Rm-Hall-Kitchen (500sq-ft) 50% June 2011

thePLATFORM | June 2011 | Volume 1 Issue 1 | hfaindia@ashoka.org

building codes

addressing the lack of best practices in the indian housing market by martina wengle

Too often affordable housing is associated with cheap materials, poor design and undesirable locations. If we truly want to address the severe housing shortage for India’s low-income population, we need to fundamentally alter the affordable housing pa≠radigm. A set of accepted best practices will provide both a tool to empower prospective low-income homebuyers and a benchmark for affordable housing developers.

Housing affordability remains very broadly defined and is often confused with merely “cheap” housing. But housing is more than a roof over our heads--homes are sources of dignity, community and economic opportunity. Housing solutions for low-income populations therefore need to consider far more than price point. Effectively serving the low-income housing market requires an effort to understand and address a wide range of needs.

Successful affordable housing solutions not only address costs to the household over the life of an investment, but also consider the availability of adequate financing

Best Practices Workshop

Monday, July 4th 2011

Ashoka HFA will conduct a workshop with developers, citizen sector organizations, architects, designers, manufacturers and certification specialists to create a framework for the Best Practices.

From this meeting we hope to begin the process of creating a set of standards and practices for affordable housing nationwide. Our goal is that all voices be represented—get in touch with HFA India to learn more about how you can be involved.

For more information, please contact hfaindia@ashoka.org

options. Housing deemed affordable by the low-income segment needs to be of appropriate quality, and designed according to the needs of the community.

Purchasing the ideal home is often a lengthy and strenuous process. People from the informal sector generally do not have experience in buying homes, have less access to information sources and have few resources advocating on their behalf. Hence they have limited choice and empowerment as consumers and their capacity to maximize the value of a real estate purchase is more constrained than in higher income segments.

While considering the demands of low-income, informal segments of the population, we must also keep in mind the profits of developers and financiers, who will be responsible for funding and building the next 26 million homes currently demanded by the market. Ensuring the use of quality materials is important for buyers, but higher quality means higher cost for builders, eating into profit margins. Alternatively, maintaining profit margins while increasing quality drives up prices for homebuyers, a particularly sensitive area for low-income populations.

Keeping in mind this fundamental tension between quality and cost, a set of best practices for affordable housing will be jointly developed by business sector and citizen sector organizations, leveraging their respective expertise in commercial and community segments. Ultimately this set of best practices will both serve as signal to potential customers that their needs have been addressed and help them make qualified decisions in what may be their first official homebuying decision. Furthermore, a set of best practices that outline a successful model for profitability in the construction of affordable housing will facilitate other developers entering the affordable housing market. By proactively addressing the needs of all stakeholders, best practices advance everyone’s interests.

thePLATFORM | June 2011 | Volume 1 Issue 1 | hfaindia@ashoka.org

EVENTS | Past | Present | Future Housing Summit Barcelona, Spain December 2010

Ashoka, in partnership with the Hilti Foundation, brought together 40 housing sector leaders from 12 countries in Barcelona for a Summit of Global Housing Entrepreneurs. The summit’s approach was decidedly unconventional: each participant played an active role in identifying a common agenda to advance affordable housing for base-of-pyramid populations globally.

Housing Symposium Vishnu Swaminathan of HFA India spoke on “Catalyzing Affordable Housing through Hybrid Pune, India Value Chains” at a gathering in Pune as part of a year-long symposium on affordable housing, April 30 2011 focusing specifically on renewable energy, sustainable construction and technological innovation.

30th Anniversary Paris, France June 21-22 2011

It’s Ashoka’s 30th Anniversary! More than 1,000 changemakers from all around the world will share lessons from the past 30 years and our vision of the future.Vishnu Swaminathan of HFA India will attend the discussions targeting a new housing value chain.

IDB Forum Sao Paolo, Brazil June 27-28 2011

The Inter-American Development Bank’s (IDB) 1st IDB Forum for the Development of the Base of the Pyramid in Latin America and the Caribbean will gather over 500 leading experts and participants for a discussion of market-based approaches that are redefining international development in Latin America and the Caribbean.Vishnu Swaminathan of HFA India will moderate the panel on Creating Housing Solutions for the BOP: Prosperity Begins at Home.

Best Practices Workshop July 4 2011

HFA India will host a workshop to begin the formulation of a set of best practices for the affordable housing segment in India. HFA India is committed to including the perspectives of all stakeholders, so be in touch with HFA India to learn how you can become more involved.

Publications

Breaking Barriers: Housing Finance for India’s Informal Sector Ashoka has studied affordable housing finance products and practices adopted by organizations providing housing loans to low-income households working in the informal sector in urban India. The report outlines the players in the sector and their challenges in providing low-income housing finance, explores the demand for housing finance and the evolution of housing finance environment.

To request a copy of the report, please email us at: hfaindia@ashoka.org

Access to Housing at the Base of the Pyramid

In collaboration with Hystra, a hybrid strategies consulting firm, Ashoka has conducted an investigation into access to housing at the base of the pyramid, specifically for low income urban dwellers worldwide. The study unpacks various models for achieving affordable housing for all, and surfaces crosscutting insights and barriers faced. The study also identifies promising avenues for moving the sector forward, including recommendations for various stakeholders and frameworks for engaging in collaborative action, called Hybrid Value Chains, that leverage the strengths of multiple players.

To request an advance copy of the report, email us at: hfaindia@ashoka.org The complete version will be published in Fall 2011. thePLATFORM | June 2011 | Volume 1 Issue 1 | hfaindia@ashoka.org

HOUSING FOR ALL

Around the world

HFA Brazil

In 2010, HFA Brazil partnered with an association of cement manufacturers, a CSO and Brazil’s leading MFI to launch Reforma Mais, a consortium to provide low-income families with integrated home improvement solutions that include access to housing microcredit and technical assistance. More recently, in 2011, Reforma Mais members entered into a partnership with Habitat for Humanity to develop similarly integrated services with other microfinance institutions in Brazil, including Banco Santander. For more information, watch our video at: http://www. youtube.com/watch?v=MmfZKWNVAkk HFA Brazil also continues active involvement in Clube de Reforma, a national platform established in 2010 to promote innovation and entrepreneurship in the field of home improvement for low income families.

For more information visit: http://www.clubedareforma.com.br

HFA Colombia

By the end of december 2011, HFA Colombia plans to launch a multipartner financing initiative to establish a Home Improvement Finance Entity (HIFE) with multiple points of origination of loans. We bring together community sales forces providing integrated technical assistance, materials suppliers, and experienced finance providers. Social organizations under Alianza por ViviendaDigna (AVD) will eventually boast the capacity to scale to 17 cities nationwide. By year 7, the HIFE-AVD partnership projects US$292 million in loan volume benefiting over 120,000 low-income households.

Check out our video, “Pasos y Requisitos para Acceder al Programa AVD”: http://www.youtube.com/watch?v=R87GINoURhk

Full Economic Citizenship Global

FEC Global sponsored an important Summit of Housing Entrepreneurs in Barcelona in late 2010, gathering leaders from across sectors to address issues in affordable housing. To see the case studies and initial recommendations from the summit, please visit our website: http://fec.ashoka.org/content/global-summit-housing-entrepreneurs Ashoka principals Bill Drayton and Valeria Budinich spoke in May 2011 at the World Bank on “Public Goods through Social Enterprises: Creating Hybrid Value Chains” based on an article recently published in the Harvard Business Review.

A video of the meeting is available at: http://goo.gl/ktnMw The article can be obtained at: http://fec.ashoka.org/content/request-copy-new-alliance-global-change thePLATFORM | June 2011 | Volume 1 Issue 1 | hfaindia@ashoka.org

HFA INDIA Origami House Presentation

Check out the HFA India presentation, designed by Vishnu Swaminathan, based on our iconic Origami House. http://goo.gl/tYNch Feel free to send feedback regarding the presentation to: hfaindia@ashoka.org

thePLATFORM Summer 2011 Volume 1 | Issue 1 Editors: Martina Wengle

Maia Smith Design: Jeff Jorve Content: HFA India

FEC Global For more information, please visit our website at: fec.ashoka.org To be in contact or for any questions regarding information within this newsletter, please email us at: hfaindia@ashoka.org