Construction and / or renovation of affordable housing
Construction and / or renovation of affordable housing
Business Model Description
Invest in the construction, repair and sale of low-cost housing (prefabricated or manufactured based on a standard model) for low and / or middle-income people in urban or peri-urban areas through mixed financing with private investment, patient capital, potentially subsidies and / or financing of foundations.
Expected Impact
Provide affordable housing and reduce the deficit exiting in the country for low and middle income population
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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Country & Regions
- Paraguay: Gran Asunción
- Paraguay: Amambay
- Paraguay: Canindeyú
Sector Classification
Infrastructure
Development need
Needs persist in sanitation, housing, waste management and transport infrastructure. Improved sanitation reaches 50% of homes and the case of improved water to 79%. The housing deficit affects a significant swath of the population, as there is a current deficit of 800,000 homes. In terms of solid waste, most of the waste generated at the national level is not managed (I).
Policy priority
Infrastructure is one of the most important aspects of development policies, and Paraguay demonstrates this through the following policies: the Institutional Strategic Plan of the Ministry of Public Works and Communications (II), and the Master Plan of Transport 2013 (III).
Gender inequalities and marginalization issues
gender inequality in access to infrastructure is notable, especially in rural areas. Women face significantly lower rates of economic activity and labor market participation compared to men. In addition, women in rural areas live in vulnerable working conditions and without access to social security (IV).
Investment opportunities introduction
the main areas of investment opportunities were identified to address gaps in the sector, including: solid waste management, affordable housing, road and river infrastructure, and wastewater management (V).
Key bottlenecks introduction
due to the current infrastructure deficit, Paraguay presents High investment requirements on infrastructure deployment, approximately US$2.8 billion annually (VI).
Real Estate
Development need
In Paraguay, the housing deficit affects an important segment of the population (from the most vulnerable groups to the middle class), being the insufficient supply of social housing, since there is a current deficit of 800,000 homes where 13% corresponds to the quantitative type, while 87% to the qualitative type (expansion and / or improvement) (VII).
Policy priority
Infrastructure is one of the most important aspects of development policies, and Paraguay demonstrates this through the following policies: the Institutional Strategic Plan of the Ministry of Public Works and Communications (II), and the Master Plan of Transport 2013 (III).
Gender inequalities and marginalization issues
gender inequality in access to infrastructure is notable, especially in rural areas. Women face significantly lower rates of economic activity and labor market participation compared to men. In addition, women in rural areas live in vulnerable working conditions and without access to social security (IV).
Investment opportunities introduction
the housing deficit affects a significant swath of the population, with the supply of social housing being insufficient, as there is a current deficit of 800,000 homes (VIII).
Pipeline Opportunity
Construction and / or renovation of affordable housing
Invest in the construction, repair and sale of low-cost housing (prefabricated or manufactured based on a standard model) for low and / or middle-income people in urban or peri-urban areas through mixed financing with private investment, patient capital, potentially subsidies and / or financing of foundations.
Business Case
Market Size and Environment
USD 50 million - USD 100 million
"> In 2020, in Paraguay, the total housing deficit is around 800,000 homes. Of that number, approximately 100,000 families require the construction of a new home. The remaining 700,000 families require housing refaction (3)".
"> The approximate price of construction of affordable housing (for the middle segment) per m2 is approximately USD 278 (PYG 1,850,000) (4)".
> As for refaction, the amount will depend on the size and severity of the deficit.
Indicative Return
> 25%
> A feasibility study of a social or priority housing real estate project in Quito, Ecuador, in 2019, shows an attractive internal rate of return (IRR) of 25.36% (5).
A benefit / cost ratio of 1.13 and a high return on investment (ROI) of 51%, with financing between 20 years to 25 years (5).
> A company in Paraguay that is dedicated to the construction of pre-manufactured homes, Fábrica Social, presented an ROI of 110% in 2020 (6).
Investment Timeframe
Long Term (10+ years)
> A feasibility study of a real estate project for low-income or priority housing in Quito, Ecuador, in 2019, shows an attractive internal rate of return (IRR) of 25.36%, considering a maximum financing term of 25 years (5).
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Capital - Limited Investor Interest
Impact Case
Sustainable Development Need
In Paraguay, the housing deficit affects an important segment of the population (from the most vulnerable groups to the middle class), being the insufficient supply of social housing, since there is a current deficit of 800,000 homes (7).
This total housing deficit affects more than 3,000,000 inhabitants (7).
Gender & Marginalisation
Vulnerable population with low incomes are the most affected by the lack of affordable housing.
Analysis by sex reveals that men have a higher income than women, the average income gap at the national level is close to USD 95 (PYG 635,000) in favor of men. This behavior occurs in both urban and rural areas (6).
The average monthly income of employed persons in Paraguay amounts to approximately USD 280 (PYG 1,867,000), being higher in the urban area compared to rural (USD 315, (PYG 2,101,000) compared to USD 219 (PYG 1,457,000) (6).
Expected Development Outcome
> Reduce the percentage of the population without their own home and / or who live in homes that do not meet the minimum habitability conditions
> Increase the access of the most vulnerable population to homes with basic services such as electricity, drinking water, and title of domain
> Improve the conditions and quality of life of the population, both in the most vulnerable communities and in general
Gender & Marginalisation
Reduce inequalities in access to housing for the lower and middle class, women and rural population
Primary SDGs addressed
1.4.1 Proportion of population living in households with access to basic services
11.1.1 Proportion of urban population living in informal, informal settlements or inadequate housing
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Indirectly impacted stakeholders
People
Corporates
Public sector
Outcome Risks
> Alteration of the natural environment in case of projects in green fields (8).
> Production of waste by construction (8).
> Water pollution and increased mud and dust due to construction (8).
> Increase in traffic due to increased population and supply chain operations (8).
Impact Risks
Drop off: lack of long-term affordable financing by the banking system due to the high costs of mortgage lines of credit (9).
External risks: High interest rate volatility could make it less attractive for investors and financial institutions to offer loans.
Execution Risks: > High land prices, which limit investments in housing construction. > high levels of requirements for housing credits that limit access to them.
Stakeholders: > Investor aversion to medium- and long-term investments such as affordable housing.
Impact Classification
What
The outcome is likely to be positive, important and expected, because access to affordable housing could provide housing with basic services
Who
Lower or middle class people living in underserved housing, and / or do not own a home due to lack of affordable options
Risk
The model must be tested at a critical scale; and external factors, such as the limited financial means of the beneficiaries, can limit the extent of the impact
Impact Thesis
Provide affordable housing and reduce the deficit exiting in the country for low and middle income population
Enabling Environment
Policy Environment
National Housing and Habitat Policy: aims to establish guidelines that lead to ensuring access to decent and adequate housing and habitat for the population (10).
Paraguay's National Habitat and Housing Plan: It is a plan that presents a roadmap to phase out the housing deficit and ensure, in the near future, decent housing in a healthy environment for an entire nation (11).
National plan for indigenous peoples - it is also intended to coordinate joint actions by governmental and non-governmental institutions that benefit this segment of society and to foster meetings with the reference members of indigenous communities to benefit from housing programs (12).
Vyá rendá Program - This is a patriotic undertaking aimed at the construction of own homes for all inhabitants in situations of housing need (13).
Fonavis Program - Program aimed at reducing the housing deficit throughout the national territory and boosting the national economy through a social housing subsidy, through the source of resources established by the gov: FONAVIS (14).
Financial Environment
AFD PRODESI financing - Loans for real estate developers. Intended for viable real estate development projects, for the sale of housing units, which were analyzed and approved by the Intermediary Financial Institutions (IFIs) (18).
AFD PROINFRA Financing - Financing for the acquisition of machinery to be used in infrastructure projects. Finances: - Real estate development projects: buildings, educational complexes, hotels, shopping centers, among others (18).
Law 60-90 (investment law) protects investments of national and / or foreign origin (19).
Regulatory Environment
Law 5368- Housing Development - It has as its main objective to make access to affordable housing and in urban areas, by financing middle-income families (15).
Ordinance No. 26.104/90 - This Ordinance is known as the General Construction Regulations, and aims to guide the building activity of the city of Asunción and to establish the technical standards of construction, safety (16).
Ministry of Urban Planning, Housing and Habitat - its main function is to establish the National Housing Policy and promote Housing Programs (17).
Marketplace Participants
Private Sector
Fábrica Social (Paraguay), Casa Fácil (Paraguay), Biocons (Paraguay), Propio (Paraguay)
Government
Ministerio de Urbanismo, Vivienda y Hábitat (MUVH), Consejo Nacional de la Vivienda (CONAVI)
Multilaterals
BID, UE, USAID, Centro Interamericano de Vivienda y Planeamiento Urbano (CINVA), Banco de Desarrollo de América Latina (CAF), Banco Mundial (BM)
Non-Profit
Un Techo para mi país, Hábitat para la Humanidad
Target Locations
Paraguay: Gran Asunción
Paraguay: Amambay
Paraguay: Canindeyú
References
- (I) PNUD. 2023. Asunción Sustentable, un proyecto transformador que mira hacia el futuro. https://www.undp.org/es/paraguay/noticias/asuncion-sustentable-un-proyecto-transformador-que-mira-hacia-el-futuro (II) Ministerio de Obras Públicas y Comunicaciones. 2014. Plan estratégico. https://www.mopc.gob.do/nosotros/plan-estrat%C3%A9gico/ (III) Gobierno Nacional de Paraguay. 2020. Actualización del plan maestro de infraestructura y servicios de transporte del Paraguay 2018 - 2028. https://www.mopc.gov.py/application/files/3816/3302/7534/Actualizacion_del_Plan_Maestro_de_Infraestructura_y_Servicios_de_Transporte_del_Paraguay_2018_-_2028_-_Informe_Final.pdf (IV) ONU Mujeres. s.f. Paraguay. https://lac.unwomen.org/en/donde-estamos/paraguay (V) Infraestructure Interviews. 2021. (VI) Marketdata. 2022. Paraguay debe invertir el 6% del PIB hasta el 2030 para cerrar brecha en infraestructura. https://marketdata.com.py/noticias/paraguay-debe-invertir-el-6-del-pib-hasta-el-2030-para-cerrar-brecha-en-infraestructura-89777/ (VII) MF Paraguay. 2022. Informe inmobiliario: Déficit, oferta, demanda y financiamiento. https://mf.com.py/medios/blog/informe-inmobiliario-deficit-oferta-demanda-y-financiamiento.html (VIII) Gobierno del Paraguay. 2014. Plan Nacional de Desarrollo Paraguay 2030. https://www.stp.gov.py/pnd/wp-content/uploads/2014/12/pnd2030.pdf
- (1) Dirección General de Estadística, Encuestas y Censos. 2012. Análisis del déficit habitacional en Paraguay. https://www.ine.gov.py/Publicaciones/Biblioteca/documento/25e3_Analisis%20del%20deficit%20habitacional%20en%20Paraguay,%202012.pdf
- (2) Dirección General de Estadística, Encuestas y Censos. 2018. Principales Resultados Anuales de la Encuesta Permanente de Hogares Continua (EPHC) 2017 y 2018. https://www.ine.gov.py/vt/publicacion.php
- (3) Última Hora. 2009. Censo revela que se necesitan de al menos unas 800 mil viviendas. https://www.ultimahora.com/censo-revela-que-se-necesitan-al-menos-unas-800-mil-viviendas-n262449
- (4) Biocons. s.f. ¿Cuánto cuesta construir o reformar una casa actualmente en Paraguay, y qué debe incluir el presupuesto de una obra? https://www.biocons.com.py/V1/cuanto-cuesta-construir-o-refromar-una-casa-en-paraguay/
- (5) Sebastián Fernando Yépez Albuja. 2019. Estudio de factibilidad de un proyecto inmobiliario de vivienda de interés social o prioritario. https://rraae.cedia.edu.ec/Record/USFQ_a2329b656f42b50c47ea1cf02858b06d
- (6) Entrevistas. 2021.
- (7) PNUD. 2023. Asunción Sustentable, un proyecto transformador que mira hacia el futuro. https://www.undp.org/es/paraguay/noticias/asuncion-sustentable-un-proyecto-transformador-que-mira-hacia-el-futuro
- (8) Adnan Enshassi et al. 2014. Evaluación de los impactos medioambientales de los proyectos de construcción. https://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-50732014000300002
- (9) Vicente Fruet Cardozo & Guzmán A. Muñoz Fernández. 2015. Paraguay: una propuesta de financiamiento de viviendas para los segmentos de ingresos medios-bajos. https://repositorio.cepal.org/server/api/core/bitstreams/42caf0cc-aa22-4efb-b036-3bf7e2a4bac2/content
- (10) Secretaría Nacional de la Vivienda y el Hábitat. 2018. Política Nacional de la Vivienda y el Hábitat del Paraguay. https://www.muvh.gov.py/sitio/wp-content/uploads/2022/04/PNVH-Digital.pdf
- (11) Gobierno Nacional de Paraguay. 2019. Plan Nacional de Hábitat y Vivienda de Paraguay. https://www.stp.gov.py/v1/wp-content/uploads/2019/02/Vol-6.-PLANHAVI.pdf
- (12) Gobierno Nacional de Paraguay. 2021. Plan Nacional de Pueblos Indígenas. https://www.indi.gov.py/application/files/8716/1903/8084/Plan_Nacional_Pueblos_Indigenas_-_version_digital.pdf
- (13) Ministerio de Urbanismo, Vivienda y Hábitat. s.f. Vy’a Renda. https://www.muvh.gov.py/blog/programas/vya-renda-2
- (14) Ministerio de Urbanismo, Vivienda y Hábitat. 2021. Sumaron entrega de 140 subsidios del programa Fonavis. https://www.muvh.gov.py/blog/2021/sumaron-entrega-de-140-subsidios-del-programa-fonavis.html
- (15) Congreso de la nación paraguaya. 2016. Ley No. 5638. https://www.bacn.gov.py/leyes-paraguayas/5155/ley-n-5638-fomento-de-la-vivienda-y-desarrollo-urbano
- (16) Junta Municipal Asunción. 1990. Ordenanza No. 26.104/90. https://www.asuncion.gov.py/wp-content/uploads/2022/07/ORD-1990-26104-REGLAMENTO-GENERAL-DE-LA-CONSTRUCCION.pdf
- (17) Ministerio de Urbanismo, Vivienda y Hábitat. s.f. Misión - Visión. https://www.muvh.gov.py/mision-vision
- (18) Agencia Financiera de Desarrollo. S.F. Acerca de la AFD. https://www.afd.gov.py/que-es-la-afd
- (19) Congreso de la Nación Paraguaya. 1991. LEY Nº: 60/90. https://www.mic.gov.py/mic/w/industria/ddi/pdf/Ley60-90.pdf