GRM 2010 GRM 2011

Abstract Details

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Title of Paper:
Regional Best Practices for Affordable Housing
Paper Proposal Text :
1. The Property Development Industry
Just as any other industry, the Property Development Industry is based on fundamentals that are often ignored by its operators. Those fundamentals include:
• Understanding of the individual market segment and its spending ability
• Understanding of the market and end user demand and requirements
• Understanding of the risks and rewards of the market
• Understand of the cost of raw material and cost of finance and its direct impact on the final cost of the delivered product
The Affordable Housing market best practices can be identified and addressed only when the property development recognizes, understands and acknowledges the basic principles above.

2. The Affordable Housing Market
The Affordable Housing market is s a market segment aimed at those citizens within the low to median socio-economic scale. The majority of the countries of the world suffer from significant shortages of affordable homes for their individual low income populations. This gap has been increasing year over year as governments and the private sector lack the skills and intestinal fortitude to address these issues head on. Most developer chose the path of lease resistance and build higher mid income and luxury homes to achieve lucrative returns in those segments.

No single entity, private of public has the magic solution to address this issue, this difficult task requires the collective skills and know-how of each of the specialized stakeholders in order to deliver viable solutions to this problem

3. Regional Best Practices
The Slums of Tomorrow
The Affordable Housing problem will not be solved by developers building Soul-less structures and apartment blocks. So many examples and so many developers have practiced this before around the world resulting in the slums of tomorrow being built today by those same developers

4. The Regional Occupier Does not follow the Western Model
The regional GCC occupier of affordable housing units does not follow the Western ideology of trading up and down in their occupancy life cycle. The concept of gradual equity building in the trade-up of western homes does not exist in this region. The large majority of families in this region prefer to have a villa as their first home instead of an apartment and will utilize that villa for the remainder of their lives, as they constantly expand the property to accommodate the expansion requirements of their families. This specific issue is exacerbated by the high cost of land in the region as the cost ratio of land to villa is significantly higher than that of an apartment.

5. Profile of the Affordable housing occupier
• Buys or seeks to own for life a detached house capable of expansion
• Lives in house built with traditional materials
• Seeks to reside in areas that have linkage with his Heritage and Roots
• Expect others to maintain the local public areas where he lives
• Expects to pay for his property less that BD 75K
• Continue to enjoy all the existing benefits of low cost utilities
• Is saddled with a 40 to 50 percent debt ratio to mortgage his property
Any affordable housing solution has to address these seemingly insurmountable issues.

6. Why Can’t Governments Solve the Problem Alone?
• No government in the world has effectively solved the problem on its own.
• Not all government are cash rich
• Not all governments have the expertise and resources to properly address these issues.
• Government accountability regimes often prevent solutions.
• Government decision making processes take too long.
• Co-ordination between government bodies are complicated.
Clearly the private and public sector have to collaborate where governments act as the facilitator and expeditor and the private sector acts as the expert provider.