Why disruptive technologies matter for affordable housing: The case of Indonesia

Big Data. Blockchain. Drones. E-Wallets. Artificial Intelligence. These are words that one would expect to hear at the latest conference in Silicon Valley, not during a discussion of Indonesia’s affordable housing challenges. Yet they were buzzing through the captive crowd in Jakarta at the Disruptive Technologies Workshop for Affordable Housing on September 17, 2018. The event, hosted by Indonesia’s Ministry of Public Works and Housing with support from the World Bank’s National Affordable Housing Program (NAHP), was attended by 150 participants from local public agencies, developers, lenders, and community organizations. The workshop’s goal was to explore one big question: How might Indonesia harness the power of disruptive technologies to transform its housing ecosystem?

Indonesia cities are growing faster than those of its Asian neighbors at a rate of 4.1% a year. However, the benefits of urbanization – economic growth and poverty reduction – won’t be fully realized until the country can increase access to basic services and invest in affordable housing for its residents. An estimated 820,000 to 1 million housing units are needed on a yearly basis to meet the growing demand between now and 2030.

Indonesia’s current housing situation dovetails with the rapid development of its technology sector. There is strong start-up culture that has birthed local giants like Go-Jek, which started as a simple ride-hailing app for motorcycle taxis and expanded to over a dozen services, including food delivery, massage booking, and mobile payments. Go-Jek is currently valued at close to $5 billion. Through its ascent, it has revolutionized aspects of life in Indonesia’s cities and contributed to a booming gig economy.

Workshop participants were keen to discover: were there other budding technologies out there, like Go-Jek, which could change the way Indonesia approached housing? Here are a few of the promising pitches that were presented to the group.

Citizen-centric mobile application that facilitates home self-construction processes

Who it’s forHouseholds; construction workers; contractors; lenders; developers; policymakers
Why it’s neededMost housing is self-built, as it’s often the only financially affordable option. Access to credit is limited, and the construction sector is largely unorganized and informal. Government subsidies given towards self-build projects are difficult to track and highly vulnerable to fraud.
How it worksUsing the mobile platform, users find contractors and get quotes for projects, purchase materials, track the progress of construction projects, rank quality of services and make mobile payments to vendors.  E-wallets help ensure that government subsidies are being used for intended purpose.
Why it’s promising·         Empowers citizens to take control of the home construction process

·         Improves transparency, organization, and competition in a huge informal construction sector

·         Aggregates data on previously informal transactions to boost inform policy-making


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City Planning Lab Affordable Housing Suitability Tool 

Geospatial planning tool that identifies optimal locations for affordable housing developments

Who it’s forSpatial planning agencies, central and local government, and developers
Why it’s neededGovernment-subsidized housing projects are often poorly located on multiple factors. They tend to be far from the central business district, geographically risky, and lack access to basic services and employment centers.
How it worksUsing the online tool, which combines geospatial and satellite data, users can generate a heat map that displays optimal locations, based on a detailed list of critical factors such as access to
Why it’s promising·         Boosts local government capacity to identify more optimal, and thus more successful, locations for affordable housing

·         Facilitates collaborative and informed decision making

IBM Blockchain  
Secure, transparent, and efficient digital ledger that streamlines land titling processes

Who it’s forLow-income and informal populations; NGO’s; Land Planning Agencies; lenders
Why it’s neededNearly 20% of urban slum dwellers don’t have formal tenure on their homes, which means they can’t access formal financing for home improvement. The process for obtaining this tenure in Indonesia is inefficient and costly.
How it worksNetworks of community workers survey and map land/ property ownership in a “fit for purpose” manner, and use blockchain – a public, secure, decentralized digital ledger – to streamline the mapping process and accelerate land titling.
Why it’s promising·         Streamlines the process and reduces the transaction costs of obtaining formal tenure

·         Provides a uniquely secure, transparent, and tamper-proof method of documentation

Property PriceTag  
Use of Big Data and new technologies to track housing supply and demand for informed decision-making

Who it’s forPublic agencies; developers; lenders; other key stakeholders
Why it’s neededData on the housing market is currently scattered across public and private agencies, and difficult to analyze in real time and on a large scale.
How it worksBig Data is consolidated across various sources, including public and private data, and data gathered through innovative methods (i.e. trained Artificial Intelligence bots that can count the number of individual homes on satellite images).
Why it’s promising·         Equips policymakers and companies to make more timely and informed decisions with regard to the housing market

·         Technologies to be incorporated into the development of NAHP’s Housing Real Estate Information System, a real-time housing database used for decision-making by both the public and private sector

The technologies described above are just the tip of the iceberg of what was discussed at the workshop.  No longer a luxury of advanced economies, these disruptive innovations hold vast potential to empower informed decision-making, formalize the informal, and radically reinvent housing value chains to transform the affordable housing sector and improve the lives of millions. Of course, as with any technological advancement, there are serious issues to consider and plan for such as consumers’ privacy rights protection and cybersecurity in an age of interconnectedness. It’s a tricky task for any government to navigate, but one well worth the waterfall of benefits.



Stakeholders, residents groan over deplorable facilities in Nigerian housing estates

Residents and Stakeholders have complained over the deplorable state of facilities and conditions in Nigerian housing estate.

They lamented over the poor state of facilities in federal government/state owned housing estates in the country, which are suffering from negligence and lack of maintenance.

Maintenance of existing housing stock has been in the front burner without any concrete action or blueprint by the authorities. For instance, the Nigerian Housing Policy (NHP) didn’t provide for the maintenance to ensure longevity and aesthetic look of government owned buildings.

According to the United Nations Centre for Human Settlement (UNCHS), poor housing maintenance in many developing countries has led to deplorable building conditions and is worsened by lack of workable strategies/techniques for implementation.

Specifically, in most Nigerian housing estates , the non-maintenance of major buildings and infrastructure such as, road network and associated sewages/drainages, gates/security posts, shopping facilities, and parking spaces, green areas, street light, perimetre fencing, refuse collection bins and disposal, power and water supply among others, have left the estates in shambles.

This is evident in locations like, Gwarinpa, Lugbe, Kubwa, Kado and Karu of the Federal Capital Territory.

According to the Chairman of Lugbe Residents Association, Mr. Odelana Adesina, the estate, which accommodates more than 70,000 residents, lacked pipe-borne water; waste disposal system as well as good road networks, thus, placing the residents in a precarious situation and susceptible to health challenges.

Adesina bemoaned the absence of light and government’s hospital in the locations and called for immediate solution to the problem.

The situation is the same at the Festac Town, a federal housing estate located along the Lagos-Badagry Expressway in Lagos. It showed that many of the windows in the housing units have been broken, the gates are visibly rotten, residents worry about power supply and the general aesthetics of an ideal housing units are lacking.

Speaking on the state of facilities in the estate, a resident, Mr. Uche Amadi lamented that issues of water supply and power have held resident bound overtime.

According to him, power supply has been irregular, making it impossible for residents to pump water. He stressed that absence of power in the estate has also impacted negatively on his barbing salon business as he often rely on generator.

“Most times, we have to buy water from hawkers because of poor power supply and that is additional expenses for us. It is also usually a noisy environment as neighbours would put on their generators”.

On her part, Mrs. Funmilayo Ojerinde said the physical outlook of the estate is a disincentive to would be tenants as the paintwork has faded over the years, making the structures to look very old.  She lamented that on several occasions, her family has to set aside special budget to fix windows that have become broken and repair the busted pipes connecting the sewage system.

For residents at the Satellite Town Estate, basic infrastructures like good roads, water, drainage system and power supply are critical problems that they battle with. Investigations revealed that the ridiculous state of infrastructure in area, which is making residents to desert the area.

The situation is not different for resident in Kudeyibu and Ire Akari Estates in Igando/Ikotun Local Council of Lagos State are facing the challenge of poor drainage, power supply and bad road among others. According to residents the ugly situation, has made motorists to avoid the communities especially during raining seasons.

A resident in the area, Adebisi Bello said that the road has been in bad form for over seven years.

Bello posited that the bad road affects the movement of vehicles and pedestrians within and outside the community because the only road that connects the residents to other parts of Lagos is in a bad shape. He said residents always engage in clearing the drainage every Saturdays to ensure that the road is at least passable after the rains.

Also, findings during a visit to Gowon Estate, a federal government residential located at Egbeda, Lagos which houses the Nigerian Navy, the Police and Customs, revealed the height of deterioration of situated facilities like toilets, water tanks, windows, the building walls and the estates are generally wearing slum-like status.

Reacting to the development, the Group Managing Director, International Facilities Service, Dr. Tunde Ayeye lamented the sad commentary as it relate to management of estates as well as other infrastructure across the nation.

According to him, there was the need to create a commercial conversation for the private sector to be involved in the maintenance of the estates and assets. He noted that the resources required to manage public buildings are very huge and as much as the government might be trying, the resources are not just enough to salvage the ugly situation.

Ayeye said: “Government needs to move its spending from input, production, to the output side. Handover the facilities including buildings, health and educational facilities to the private sector and let them be responsible for their management while government should establish the standard with which they should operate and strictly demand certain level of standard of operation from the facility managers”.

Commenting, the Group Managing Director/CEO, Alpha Mead Facilities, Mr. Femi Akintunde observed that when people don’t have common objectives and goals, it becomes difficult to harmonise the interest to maintain federal government estates which nobody currently see as anybody’s estates unlike private residential where the developer would have put certain structures, plans/modalities in place for maintenance.

He said, “The estates were established at a time when government believed that it would manage them, the economic situation as at the time coupled with the way government was structured made it possible, but, the situation has changed and we have not adapted to the current situation to suit the condition of those estates. For instance, FESTAC which was built by Federal Government and given to civil servants, the ministry could maintain it as at the time but we reached a point when those estates were sold.

“We can’t call those estates federal government owned anymore, because private people have owned it. The more we call them federal government estate, the less people would take responsibility for their maintenance. We must manage the perception that it’s privately owned”.

He posited that the ownership which transferred to people didn’t make the responsibility for management as an institution that could sustain it like when it was being run by the government. He added that the responsibility to manage the assets, has been decentralised based on the ownership structure.

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Akintunde further, noted that it’s possible that certain maintenance constitution might have been put in place but lamented on how enforceable the constitutions are. According to him, facility management requires funding and once the services can’t be funded through a well structured programme, it would be difficult to sustain standard of maintenance.

“The people in those estates have to carry out the maintenance, organised themselves into bodies, commit every members to a communal forum; empower them through legal right to note everyone interest.”

He also said that “the body saddled with the responsible could organise the estates into a sizable units and get a consultant to develop a maintenance programme for them. The services to be provided would cover environmental and things like road and drains maintenance, street light, security, recreation area, cleaning, refuse collection and landscaping.”


Liberia set to build 50,000 affordable homes

Liberian President, George Weah

Liberia’s National Housing Authourity (NHA) is set to construct  50000 affordable housing units by signing a Memorandum with the GELPAZ Liberia.

According to the Deputy Managing Director for Technical Services at the NHA, Hon. Isaac Roberts, Jr,  the project will involve at least 500 units.

He also said the project will spread in two communities, Memeh Town, near Ricks Institute and VOA in Brewerville and Montserrado County first as it aims to further the construction in 15 counties.

He said further that an additional 12.5 acres of land has been acquired to the already owned 12.5 acres of land in VOA area.

The land he said will be developed to resettle about 64 families living in temporary homes near VOA, Brewerville.

90% of locally alternative materials have been billed to be used for the construction.

The acquired land is close to the beach with a beach front design that will be built at a cost of twelve to fifteen thousand dollars. The housing will comprise of one bedroom apartment, two bedroom, three bedroom and four bedroom apartment represented by F1, F2, F3, and F4 respectively.

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Mr. Roberts also added that the units will be sub divided into four categories namely social, luxurious, economy luxurious and pro-poor housing. He explains that the division was to give Liberians financial options they can choose from according to their financial positions.

Robertsfield Highway – Sarpawein or Tower Hill and the Schefillin Town will also be targeted. The units will be built using up to 90% locally alternative materials.

60% of Liberians in urban areas live in the slums in a country where urbanization rate is 3 per cent. The housing crisis came after years of civil war. NHA estimates that by 2030, 500 000 housings will be needed.

The NHA is also holding talks with other investors for construction of an additional 30 000 units across the country. This is in efforts of President George Weah’s pledge of building affordable homes.

Liquidity crisis frustrates construction, real estate companies

Sector down by 78% year-to-date

The widespread liquidity crisis has been said to be contributing to the problem militating against every sector in the country and the construction and real estate companies are, however, not left out.

The construction and real estate companies listed on the Nigerian Stock Exchange, NSE, now currently ranks one of the worst performing sectors in the stock market. The sector is the only one that posted negative returns for the three consecutive quarters this year.

Majorly, activity in the sector went down by 13.78 percent year-to-date though it outperformed the NSE All Share Index, ASI, which is down by 16.34 percent year-to-date (y/d). Though almost every sector in the market recorded dismal performance in the third quarter (Q3) ended September 30, 2018.

The real estate and construction sector has maintained poor outing in three consecutive quarters this year. In the first quarter ended March 31, 2018, the sector declined by 15.97 percent. The performance which improved in the second quarter, but maintained a down-trend to 13.79 percent, while it closed the third quarter with 13.78 percent decline.

The lacklustre performance has also spread to other real estate related products, including real estate funds – a mutual fund that focuses primarily on investing in securities offered by real estate companies – and Real Estate Investment Trust, REIT.

REIT declined by seven percent between January and October 2018, according to data from the Securities and Exchange Commission, SEC. Capital market operators opine that the state of the sector is reflective of the general state of the economy, saying that once the economy picks up, the sector will be revived.

Hakeem Ogundiran, a former Managing Director of UAC Property Development Company, UPDc Plc, and Founder/Chief Executive Officer of Eximia Realty Limited, speaking at the forum by stakeholders in real estate, said that the slow progress in the sector is attributable to inconsistency in government policies and the high cost of construction. Additionally, he said that access to long-term funds is very limited hindering progress in the sector.

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Comparing construction/real estate with other sectors

Analysis of the performance by every sector, particularly, 11 sectors on the local bourse indicated that the oil and gas sector appreciated most than every other sector. The sector rose by 8.63 percent, followed by the agriculture sector, which rose by 7.84 percent and services sector that notched up by 4.69 percent. The financial service sector recorded a marginal increase of 0.89 percent. However, the natural resources sector, the information and communication technology, ICT, and the healthcare sectors led the laggards, dropping by 24.85 percent, 15.94 percent and 13.78 percent respectively. The real estate sector placed fourth with 13.78 percent decline, while the consumer goods and industrial goods sectors were down b 2.48 percent and 2.31 percent respectively.

However, the natural resources sector, the information and communication technology, ICT, and the healthcare sectors led the laggards, dropping by 24.85 percent, 15.94 percent and 13.78 percent respectively. The real estate sector placed fourth with 13.78 percent decline, while the consumer goods and industrial goods sectors were down b 2.48 percent and 2.31 percent respectively.

In the second quarter of the year, the consumer goods sector appreciated the most, rising by 31.27 percent, followed by the financial service sector with 27.03 percent increase and the agriculture sector, which rose by 25.46 percent. The services sector placed fourth, rising by 20.46 percent; industrial goods sector appreciated by 12.59 percent, while the oil and gas, conglomerates and healthcare sectors were up 4.58 percent, 3.01 percent and 2.38 percent respectively. The natural resources sector led on the flip side, depreciating by 18.05 percent, followed by the construction/real estate sector, which fell by 13.79 percent and the ICT sector with 10.08 percent.

How companies  in construction/real estate sector are performing

Further analysis showed that the share prices of the four companies listed in the sector ended the period in red. While two of them, Arbico Plc and Roads Nigeria Plc stagnated, UAC property Development Company (UPDC) Plc and Julius Berger Nigeria Plc recorded a price decline of 41.22 percent and 23 percent respectively.

Similarly, out of the three REITs trading on the Exchange two of them – Skye Shelter Fund and UPDC REIT – recorded price depreciation at -5 percent and -10 percent respectively. However, Union Homes REIT appreciated by seven percent during the period. The performance of the share prices is largely reflective of the financial positions of the companies as the three companies that have released their Q3 and nine months financial statement indicate a bad financial state.

UPDC Plc’s revenue, for instance, slumped by 36.6 percent to N1.989 billion from N3.136 billion in Q3’18, while it recorded a worsened loss before tax dipping by 138.05 percent. Specifically, the company recorded N4.530 billion loss before tax (LBT) compared to N1.903 billion LBT in the same period in 2017.

In the same vein, Arbico Plc’s revenue went down to N3.270 billion from N3.899 billion, representing 16.1 percent decline. Its profit before tax (PBT), however, improved by huge 320 percent to N174.29 million from N41.46 million in the corresponding period in 2017.

For Julius Berger Nigeria Plc, it was a mixed performance. The company’s revenue rose by 12.3 percent to N118.47 billion from N105.485 billion in 2017, while its PBT nosedived massively by 93.8 percent to N5.056 billion from N81.562 billion in 2017.

Operators react

Tola Odukoya, Managing Director/Chief Executive Officer, FSL Asset Management attributed the poor performance to liquidity problem within the economy.

He stated: “The real estate to a large extent is not doing well, even within the economy just because of liquidity issues. Though it is still a very good investment outlet, but for the fact that there is no liquidity generally within the system, investors are shying away from the sector because they need a sector that will guarantee them return on investment.

“Most people are also putting off their projects because they are finding it difficult to finance those projects. So, that dryness of liquidity affects the performance of companies within that space also.

“It is a sector that has a strong positive correlation with the performance of the economy; so when the economy was doing well, this sector was also doing well. We just came out from a recession and there is the likelihood of the economy sliding back into recession. So, in a situation like this, in terms of the scale of preference, real estate and construction sector is not the first thing people think of. They will, first of all, think of the basic needs of feeding and clothing. Once the economy picks up significantly, you will see activity in the sector will also picking up.”

“If UPDC Plc, for instance, was selling 200 or 500 units daily when the economy was good, I am sure it will not be doing as much as that now because of the liquidity crunch and of course, that will affect their performance in the stock market.

“Julius Berger, (JB Plc) which is a key construction company, has been having issues for sometime and it boils down to the same problem of liquidity.

“Do not forget that some unlisted construction companies are also competing with Julius Berger in vying and securing government contracts that, typically, would have gone to Julius Berger and this is eating into JB’s market share, Odukoya asserted.

Also reacting, Mr. Charles Fakrogha, Chief Relationship Officer and stockbroker at Foresight Securities, said: “The performance of the sectors in the market reflects what is going on in the larger economy. If you look at real estate itself (construction and housing), we are not seeing any activity there. There is a serious lull in the sector and the companies operating in that space are not doing well at all and that is what is reflecting in the market where we are seeing their performance. Virtually all the real estate companies are not doing well in the market and it is just a simple reflection of what is happening in the general economy.

“The sectors that are doing well in the market, of course, comprise of companies that deal on essentials. The consumer goods sector, for instance, is doing well because they offer essential commodities and that is why it is performing well. Companies in consumer goods and agriculture sectors sell products that everybody needs and so despite the liquidity crisis in the economy, some of these sectors will continue to perform well and companies that are in the sectors will continue to sell their goods and services and people will continue to buy and you see that also reflecting in their prices.”



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