A model for low-income housing in Pakistan June 2011

2 Approach to HousingAMC A large housing shortage exists in South Asia, with Pakistan leading the way Afghanistan India Pakistan Source: UNICEF (2009), UN Habitat (2001)

3 Approach to HousingAMC Agenda Housing shortfall in Pakistan AMC’s philosophy -Developments vs. Communities -Example of AMC progress AMC’s approach to sustainability -Value creation and cost savings -Incremental construction AMC lessons for scale worldwide

4 Approach to HousingAMC “The country, at present, is facing a shortfall of more than 6 million housing units while loan disbursement…has almost ceased and lower- and middle-income group has totally been ignored.” ~ Daily Times, 2009 …Rented units increasing, driving a need for housing Subsidized and free rent is decreasing… High inflation and urbanization exacerbating the housing shortage in Pakistan -2.9% +3.9% Source: Daily Times, World Bank, 2009, Federal Bureau of Statistics: Housing shortfall is reaching alarming levels Population: 170M (2009) Average Family Size: 6.3 (Urban Punjab, 2009) GNI per-capita (USD): $83/month Inflation: 13-20% (2009) “The housing shortage in Pakistan stands at 7.57 million units as housing finance-to-GDP ratio in the country is below one percent compared with seven percent in India and percent in the developed world.” ~ World Bank, 2010 “The housing shortage in Pakistan stands at 7.57 million units as housing finance-to- GDP ratio in the country is below one percent compared with seven percent in India and percent in the developed world.” ~ World Bank, 2010 “The country, at present, is facing a shortfall of more than 6 million housing units while loan disbursement…has almost ceased and lower- and middle-income group has totally been ignored.” ~ Daily Times, 2009

5 Approach to HousingAMC Agenda Housing shortfall in Pakistan AMC’s philosophy -Developments vs. Communities -Example of AMC progress AMC’s approach to sustainability -Value creation and cost savings -Incremental construction AMC lessons for scale worldwide

6 Approach to HousingAMC AMC founded on scalable & appropriate approaches “To provide innovative affordable housing solutions to the lower income segments of the Pakistani population, and to create vibrant and empowered communities.” - Ansaar Management Company Mission Statement

7 Approach to HousingAMC AMC differentiates itself by dedicating focus to building communities, not just homes Most developers build homes……AMC builds communities Issues driven by home-only approach: Ghost towns -Speculators buy up land and/or homes and hold them for several years while they appreciate in value Opportunities offered by communities: Conflict resolution -Strong communities can resolve internal problems before they escalate Limited sense of ownership of communal space -Communities dump trash in public areas and do not maintain common space Difficult to sell without community -Lack of community makes it challenging to convince a family to move Social infrastructure -On-site health, school and livelihood opportunities provide residents with more than just a place to live Brighter future -Less opportunities for gangs, drugs & violence to gain a foothold

8 Approach to HousingAMC Example: An AMC supported community in development: June 2007 Kala Shah Kaku 12 KM from Lahore 3 KM off GT Road 20-acres

9 Approach to HousingAMC June 2008

10 Approach to HousingAMC June 2009

11 Approach to HousingAMC Today: Continuous Improvement by the Community 100% Affordable plots sold Nearly 2000 active residents Mosque, schools, commercial area, income generation and community development programs ACTIVE

12 Approach to HousingAMC Agenda Housing shortfall in Pakistan AMC’s philosophy -Developments vs. Communities -Example of AMC progress AMC’s approach to sustainability -Value creation and cost savings -Incremental construction AMC lessons for scale worldwide

13 Approach to HousingAMC Build road access to less costly land Provide: Electricity Water access Build block by block: Homes Internal roads Parks Sewerage Build vibrant comm- unities where others will want to live Build: School Health center Mosque Community center Reach target customer: Occupancy restrictions AMC’s business model dependent on value creation and cost savings AMC’s profitability driven by sale of ‘prime’ plots at market rates Prime plots sold without occupancy restrictions Standard plots require immediate occupancy for a minimum of 5 years Buy off-road land Develop civil works Block based design Build comm- unities Social infra- structure Enforce sales criteria Cost savings & value creation Value creation Cost savings Value creation Mission enabler Savings & value created allow AMC to cross subsidize affordable plots by selling restriction free prime plots Description Result AMC creates financial value through critical cost savings and value improvement activities

14 Approach to HousingAMC Pave main roads Electrify entire area -Policy requirement that could be changed Lay pipes for entire area’s water supply Construct block A -Build sewerage -Pave internal roads -Build Park -Construct homes Sell standard homes in block A & start construction of Block B -Utilize revenue to fund construction of Block B -Start community development Repeat for subsequent blocks Hold prime and commercial plots until value appreciates, then sell AMC’s block-wise construction process allows for cost savings via incremental construction Building the AMC model village incrementally reduces the need for upfront capital because initial sales fund subsequent construction, ultimately reducing the cost per home AMC’s Incremental Construction Process Pave main roads Start Community Development Construct Block A Sales from Block B fund construction in Block C …And sales from Block C fund construction in Block D & so on… Prime plots Standard plots Commercial plots ParksGraveyard Education complex Community center Mosque Health center Waste center Prime plots located on main road and sold at high margin Excavate for water accessInstall sewerage Sell Block A homes Construct Block B The resulting community is vibrant, affordable and self sustaining Social infrastructure has supported community growth since Day 1

15 Approach to HousingAMC Agenda Housing shortfall in Pakistan AMC’s philosophy -Developments vs. Communities -Example of AMC progress AMC’s approach to sustainability -Value creation and cost savings -Incremental construction AMC lessons for scale worldwide

16 Approach to HousingAMC Lessons from AMC: Turnkey solutions needed to unlock scale in the affordable housing sector Community management systems Social infrastructure (health, school, garbage) Occupancy requirements Incremental construction Enable community maintenance & upkeep for long-term Create value by building proper social infrastructure on-site Avoid ghost towns by requiring immediate, min. 5 year occupancy Save on capital costs by constructing incrementally Government and Aid agencies should partner to incentivize developers to unlock scale through a proper balance of incentives and restrictions Potential Incentives: Facilitation in regulatory approvals Subsidized interest rates on loans (easier to sell homes) Government branding External infrastructure provided Rezone nearby land favorably Potential Incentives: Facilitation in regulatory approvals Subsidized interest rates on loans (easier to sell homes) Government branding External infrastructure provided Rezone nearby land favorably Potential Restrictions: Address all turnkey solutions Involvement of stakeholder to ensure community management Agreement to price ceiling Potential Restrictions: Address all turnkey solutions Involvement of stakeholder to ensure community management Agreement to price ceiling

17 Approach to HousingAMC Together we can unlock real change for real people “After years of living in a physically abusive environment with my brothers and their families, I am now able to afford an independent home on a minimum wage salary.” -Muhammad Akram Security Guard Monthly income: ~70 USD “With two mentally retarded daughters, I used to often worry about where they would go after I die. After 20 years of paying rent, my dream of a secure future is a reality.” -Naveed Ahmad Driver Monthly income: ~120 USD

18 Approach to HousingAMC Thank you