Unlocking lower-cost housing opens up $1.5-billion market
How can a bank solve the need for low-income housing?
Shared value and corporate impact
Financial services strategy
Area of Expertise:
Shared value, transformation and inclusive business
Land reform is the most pressing and emotional political issue in South Africa. Genesis Analytics was approached by a banking client to design a solution to support urban land reform and the transformation of urban housing markets. We worked on this with our partners, Consulting for Sustainable Solutions.
First, a core problem was identified. Simply put, the available stock of entry-level homes was too expensive for 70% of the population. Besides being a critical social issue, this also presented a missed market opportunity for banks and their corporate clients. If homes were more affordable, financial institutions could service new markets at the base of the pyramid with mortgage loans, while financing corporates to build new homes.
To make the business case clear, we quantified the potential size of the missed market at $1.5billion a year by 2030. Thereafter, we undertook an analysis of why entry-level housing is so expensive, then designed a commercial fund on shared-value principles to solve the challenges identified.
The fund was designed for financial institutions and corporates acting together to invest in alternative building technologies, green tech, modular housing, inner-city rental refurbs, more social and student housing, and the support of black property developers.
This solution fully encapsulates shared value: we helped our client and the sector to innovate a response to a major social problem while using the company’s core expertise, generating commercial returns and opening new markets.
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