por Laura Aguilera – Consultora del BID para proyectos de Desarrollo Urbano y Vivienda
Recently, I watched a piece about the real estate bubble in China. I was struck by the amount of dwellings and cities that are currently empty, like a scene from a ghost town in an old western movie. China’s focus on urban development has not only focused on housing, but also the construction of entire cities (shopping malls, townhouses, office buildings, roads, and highways)—investments that have reached annual spending of about USD 2 trillion (CBS). This made me wonder about some of the risks and benefits of investing heavily on housing as a way to spark economic growth in developing countries.
Studies show that affordable housing or rent can have significant positive effects on citizens’ economic development and personal well-being; access to health and education are examples of this phenomenon (Lubell and Brennan 2007). In addition, these positive effects can be extended to the community, through increased local spending and employment opportunities, which creates an important revenue source for the city (Center for Housing Policy, 2011). According to the Center for Housing Policy, the construction of 100 new housing units for low income families can lead to the creation of 80 jobs as a result of construction, 42 positions generated as a result of local spending, and 30 additional jobs created from households moving into new homes.
China, one of the fastest growing countries in terms of GDP and the world’s second largest economy, offers an interesting case study for housing-led growth. In 2008, after the global financial commotion, China injected USD 580 billion as stimulus package to help withstand the global financial crisis. As the economy was growing, the urban population and disposable income were also expected to grow. In fact, in the last 30 years 470 million people have moved to the cities, growing from 20% to 50% in 2010.
McKinsey & Company conducted a study regarding the urban population in China from 2007-2008, finding that if the current trend continues, the country’s urban population will reach one billion by 2030, with some cities reaching 350 million people (more than the entire population of the United States). All these factors provided strong support for expanding the housing market for an increasing urban population (Milken Institute, 2012). Nevertheless, the units built in the new Chinese urban developments are not necessarily serving rural migrants or low income families; new housing is purchased and owned by people from an emerging middle class looking for options to invest their money (note that prior to 1998 Chinese citizens were not allowed to own real estate). Gillem Tulloch, a Hong Kong based financial analyst, told CBS that many people have spent all their savings on property investment, purchasing 5 or even 10 apartments. Tulloch suggests that the Chinese government might have encouraged over-development, and now housing that is too expensive for immigrants’ budgets. An apartment costs between USD$50 to $60,000, more than 45 times the average annual working class salary.
[vsw id=”uxjwhk1ktNw” source=”youtube” width=”425″ height=”344″ autoplay=”no”]The Chinese real estate market presents interesting questions for Latin America, a region that is now one of the most urbanized in the world, with nearly 80% of the population residing in urban areas, many without proper provision of affordable housing and associated infrastructure services (UN Habitat, 2012). Based on recent experiences in China, it is worth asking: How can governments and policy makers ensure that growth policies are reaching the right segments of the population? What kind of housing is needed in Latin America, and for whom? While each market might present different issues, and appears that there is no exact answer, it is clear that understanding the socio-cultural structures within urban sites, is key to design programs and strategies that will help to ensure these programs include the excluded, (IDB, 2010).
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2. Center for Housing Policy, 2011
6. IDB, 2010
Interesting article. It would be interesting to see the amount that was spent on the surrounding infrastructure and to see how this strategy will play out over an extended period of time.
Many countries include policies to guarantee affordable housing in urban developments, like securing a percentage of the new dwellings to low income families. When applying these types of policies in LAC, we need to consider that affordable services are accessible as well when ensuring affordable housing in urban areas where low, middle and high income families are supposed to share urban spaces. In other words, services like affordable public transport and public schools are required to attract low-income families to live in urban areas together with other families with different economic realities. Another solution is to prevent urban land speculation by guaranteeing selected urban spaces to construct only affordable housing to the poor.
Excelente Información que podemos aprovechar en los países en vías de desarrollo. Para una mayor difusión, sugiero que este importante artículo se traduzca al español.
Muy interesante. Actualmente en Guatemala es evidente el crecimiento inmobiliario, tanto en edificios para oficinas, centros comerciales como para vivienda, en algunos casos la oferta es tal que hay edificios casi vacíos, y proyectos inmobiliarios para vivienda que están fuera del alcance de la gran mayoría de la población; seguro que ha contribuido con la creación de nuevas fuentes de trabajo, pero, yo me pregunto, porqué en países como el nuestro hay tanta oferta inmobiliaria para un mercado tan reducido? Entiendo que países como China construyen ciudades para su fuerza laboral, pero en nuestro caso, lo que no hay es empleos que le procuren a las familias riqueza mas allá de sus necesidades básicas.
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