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Housing

Affordable housing rental finance

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Affordable housing rental finance

Compare IOA
Country
Brazil
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Real Estate
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
20% - 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
Housing gap of 6-8 million units in Brazil, over 90% in affordable housing sector (13)
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Sustainable Cities and Communities (SDG 11)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Reduced Inequalities (SDG 10) Gender Equality (SDG 5) Industry, Innovation and Infrastructure (SDG 9)

Business Model Description

Provide affordable housing finance to households outside the formal banking system and with limited credit history, at conditioned repayment rates

Expected Impact

Enhance access to affordable housing for households outside the formal banking system

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Brazil
Region
  • Brazil: São Paulo
  • Brazil: Rio de Janeiro
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Infrastructure

Development need
Brazil is held back by chronic underinvestment in infrastructure spending only 2.5% of GDP (2) This leads to critical structural inefficiencies: deficient existing transmission lines are responsible for a 20% energy loss (5); lack of investment in wastewater treatment is responsible for epidemics in over 1/3 of Brazilian households (6)

Policy priority
Infrastructure development is a top priority for the new administration, who has pledged to invest nearly US$ 50 billion in infrastructure in 2019 alone (vs. e.g., US$ 7 billion in 2018) (3) (4)

Gender inequalities and marginalization issues
Poor access to core infrastructure services forces women to allocate a large fraction of their available time to family chores (7)

Investment opportunities introduction
New administration's infrastructure development pledge means closer collaboration with private investors (e.g., continuity of PPI program and concessions timeline from past to current administration)

Key bottlenecks introduction
Licensing, funding for land acquisitions, capital requirements

Sub Sector

Real Estate

"Development need
More than 50 million Brazilians live in inadequate housing with 66% of those in need of housing living below the poverty line with low or no access to formal banking facilities (1) The housing deficit in Brazil was nearly 8 million households in 2017, up from 5 million in 2012 (6)"

Policy priority
Social housing remains a government priority, with the current administration intent on reforming the 'Minha Casa, Minha Vida' program by further segmenting access to housing and financing

Gender inequalities and marginalization issues
Traditional inheritance practices also hinder women’s ability to obtain land in rural areas and yet, as many women move to urban areas in search of jobs, affordable housing continues to be scarce (8)

Investment opportunities introduction
There is a housing gap of 6-8 million units in Brazil, and over 90% of these are concentrated within the affordable housing sector. This amounts to 25-30 million people without regular housing (6)

Key bottlenecks introduction
supply challenges and a huge financing burdens: a family earning up to three minimum wages spends over 30% of income on rent (2)

Industry

Real Estate

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Affordable housing rental finance

Business Model

Provide affordable housing finance to households outside the formal banking system and with limited credit history, at conditioned repayment rates

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Housing gap of 6-8 million units in Brazil, over 90% in affordable housing sector (13)

There is a housing gap of 6-8 million units in Brazil, and over 90% of these are concentrated within the affordable housing sector. This amounts to 25-30 million people without regular housing (13) There is an estimated ~3 million precarious households and shelters in Brazil, home to over 11 million people (11)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

20% - 25%

A benchmark investor operating in the subsector is targeting returns of 20-25% (15)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

Enterprises like Bille, which provide both housing financing and physical housing infrastructure, operate a fast-deployment model which offers relatively immediate access to financing and broadened access to housing quickly by speeding up construction times (14) (15)

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Market - Highly Regulated

High dependence on government-provided alternatives under MCMV has historically crowded out the private sector

Capital - Limited Investor Interest

High interest rate volatility could make it less attractive for investors and financial institutions to lend

Low financial literacy may affect loan uptake and possibly repayment rates
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

More than 50 million Brazilians live in inadequate housing with 66% of those in need of housing living below the poverty line with low or no access to formal banking facilities (1)

The housing deficit in Brazil was nearly 8 million households in 2017, up from 5 million in 2012 (6)

Access to formal housing is largely driven by both supply challenges and a huge financing burdens: a family earning up to three minimum wages spends over 30% of income on rent (10)

Gender & Marginalisation

Traditional inheritance practices hinder women’s ability to obtain land in rural areas and yet, as many women move to urban areas in search of jobs, affordable housing continues to be scarce (8)

Expected Development Outcome

Ensure accessibility to housing for individuals and families at the bottom of the pyramid

Broaden access to finance to vulnerable people by offering alternative and tailored credit lines

Kickstart credit provision to millions of individuals, giving them the opportunity to grow financially

Gender & Marginalisation

Increase women's access to affordable housing

Primary SDGs addressed

Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities

11.1.1 Proportion of urban population living in informal, informal settlements or inadequate housing

Current Value

16.3% (2018) (20)

Secondary SDGs addressed

1 - No Poverty
10 - Reduced Inequalities
5 - Gender Equality
9 - Industry, Innovation and Infrastructure

Directly impacted stakeholders

People

Homeless, evicted, and citizens living in precarious housing such as in favelas

Indirectly impacted stakeholders

People

Neighboring populations to favelas, where crime rates are up to four times higher than in other parts of the city (12)

Outcome Risks

Sustainable housing lending practices and greater private participation can create a window of opportunity for more predatory lenders to enter the market under the guise of sustainable financing

Impact Risks

Unexpected impact risk: predatory lenders entering the market under the guise of sustainable financing

Evidence risk: financing model still young and needs to be proven at critical scale

Stakeholder participation risk: low financial literacy and limited economic means of beneficiaries can limit the scale of impact

Impact Classification

C—Contribute to Solutions

What

Access to finance could provide affordable housing to individuals at the bottom of the socioeconomic pyramid and include them in the financial system

Risk

The financing model is still young and must be proven at critical scale; and low financial literacy and limited economic means of beneficiaries may limit the breadth of impact

Impact Thesis

Enhance access to affordable housing for households outside the formal banking system

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

('Minha Casa, Minha Vida' program): social housing programme which segments access to housing and financing - resulting in two (rather than one) housing programs, with one focused primarily on lowest-income populations in which barriers to access housing are lowered (16)

(The Ministry of Regional Development): has made an explicit case to engage private investors and developers more closely than in past administrations (17)

Financial Environment

Financial incentives: Detailed financial incentives under the future reform of the MCMV program have not yet been disclosed

Regulatory Environment

(Ministry for Regional Development): governs and regulates affordable housing, supervises the 'Minha Casa, Minha Vida' program

(Caixa Econômica Federa)l: Housing lending is largely dominated by the government-owned Caixa Econômica Federal, which is supervised by a range of regulators, including the Central Bank (18)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Bamboo Finance, Bille, Crinale

Non-Profit

Gerdau, Programa Vivienda, Favelar (works with Habitat), Metlife Foundation, Complexo Damareda, Racia Favela

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map

Brazil: São Paulo

The Southeast of Brazil concentrates the highest number of people living in precarious housing in Brazil (11.5 million people, or 6% of the population). 23.2% of these are in São Paulo and 19.1% are in Rio de Janeiro (3)

Brazil: Rio de Janeiro

The Southeast of Brazil concentrates the highest number of people living in precarious housing in Brazil (11.5 million people, or 6% of the population). 23.2% of these are in São Paulo and 19.1% are in Rio de Janeiro (3)
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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