Data to support investors in housing finance in SADC

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Investor interest in housing and property in Africa has grown substantially in the past ten years.  Driven, in part, by new market opportunities created by economic growth and a rising urban middle and lower middle class, investors are looking for specific initiatives on which to place their bets.  Data across most of Africa is scarce, however, especially so for the housing and housing finance sectors.  Specific gaps include:

  1. Market overview data: data on the size and scope of the demand for affordable housing and for housing microfinance, quantification of volume and amounts being invested in each country in affordable construction and finance.
  2. Affordability and profitability of investments in affordable housing, mixed use housing, housing microfinance
  3. Competitive market horizon: the size, financial capacity, and geographic reach and market share of participants in the construction sector and in the housing finance (mortgage, home equity, personal loan, consumer loan, microfinance and housing microfinance sectors)
  4. Land ownership and titling norms and constraints, the availability of land for development and associated conditions, etc.
  5. Building code, and building materials norms and constraints, relating to availability and costs
  6. Infrastructure norms and constraints (both
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Investor interest in housing and property in Africa has grown substantially in the past ten years.  Driven, in part, by new market opportunities created by economic growth and a rising urban middle and lower middle class, investors are looking for specific initiatives on which to place their bets.  Data across most of Africa is scarce, however, especially so for the housing and housing finance sectors.  Specific gaps include:

  1. Market overview data: data on the size and scope of the demand for affordable housing and for housing microfinance, quantification of volume and amounts being invested in each country in affordable construction and finance.
  2. Affordability and profitability of investments in affordable housing, mixed use housing, housing microfinance
  3. Competitive market horizon: the size, financial capacity, and geographic reach and market share of participants in the construction sector and in the housing finance (mortgage, home equity, personal loan, consumer loan, microfinance and housing microfinance sectors)
  4. Land ownership and titling norms and constraints, the availability of land for development and associated conditions, etc.
  5. Building code, and building materials norms and constraints, relating to availability and costs
  6. Infrastructure norms and constraints (both basic services infrastructure relating to residential accommodation, and broader infrastructure affecting housing delivery – such as the cost of shipping materials over poor roads, etc.)

As investors struggle to assess market risk and opportunity with precision, they shift their sights to more easily dimensioned and quantified investments – sector investments in energy, telecommunications, retail or commercial ventures – or price for the inability to fully review and dimension risk, ultimately narrowing the affordability of the housing output.  Better data would make the housing and housing finance markets in Africa work better for all market participants, including the poor.

 

FinMark Trust’s Centre for Affordable Housing Finance in Africa has already undertaken some work in this regard.  The Housing Finance Yearbook, now in its second edition, provides an overview of 28 countries and one region, and offers key data for each in its analysis of investment opportunities.[1]  Work in the housing microfinance and pension-backed lending fields have also offered some insights: see http://www.housingfinanceafrica.org/themes/innovation-in-housing-finance/ Other players, such as Urban LandMark[2], the Housing Finance Information Network (HoFiNet)[3], the World Bank’s Doing Business Initiative, and some early stage investors, are also working in this field, trying to compile data in support of housing finance knowledge in Africa and globally.

 

The objective of this exercise is to identify the housing and housing finance sector data needs of potential investors in SADC, and to develop a sustainable and cost-effective mechanism for delivering the data and indicators necessary to support growing housing investment markets throughout SADC.  Because one-time data snapshots are less useful to investors than repeated, comparable market data which is available on a consistent basis over time, the exercise should also consider the cost and feasibility of producing useful data analyses over a period of time sufficient to support enhanced private equity, mezzanine and debt investments in the affordable housing and affordable housing finance sectors. Critically, this data should not only be investor led, supporting existing investment expectations, but should also offer insights that would lead investors to consider new or increased scope and scale of investments in affordable housing and housing finance opportunities, especially those which will reach lower income earners.

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