Private Sector Initiatives For Low Income Housing Presented by Jawad Aslam, AMC’s Chief Executive Officer, on May 29, 2015

Changing the face of affordable housing through private sector intervention 2

Feed his family Get children employed 40 Year old male, married with 5 children Primary School dropout Earns PKR 12k-17k per month as a laborer His Plans Build a house Start his own business His Dreams Proper Health Education for children Clean water / Sanitation His Needs The Problem: Typical citizen of Pakistan Getting his children married Avoiding medical emergencies His Challenges

How traditional development models have failed the affordable housing sector 4 Haphazard site selection, poor design, speculation and lack of management leads to: Ghost Towns: low occupancy communities Ghettos: a nesting-ground for vices such as theft, drugs, prostitution and gangs A fresh solution is desperately needed to create empowered communities which have: Occupancy leading to communal ownership Conflict resolution mechanisms Long-term sustainability

A Fresh Approach to Affordable Housing Solutions Develop roughly 2/3 of the saleable area into homes sold at cost Ensure occupancy to prevent ghost towns from emerging Remain involved in the project for 5 years to prevent formation of slums 3 Sell remaining land at market rate to recover cost of the whole project, ensuring financial viability. 4 Acquire peri-urban private / government land at a low cost 1 Set aside non-saleable portion of the land to create: Civil infrastructure such as sewage and water towers; and Social infrastructure such as schools, parks and medical facilities. 2

Master Layout Plan 6

7 Home Layout: One Bedroom Plot Size – 42’x22’ 227sft covered Room1 11x10 (116sft) 1 Bath 7x4 (28sft) 1 Kitchen 7x6.5 (48sft) Veranda 10x7 (70sft)

8 Home Layout: Two Bedrooms Plot Size – 42’x22’ 350sft covered Room1 11x10 (116sft) Room2 12x10 (123sft) 1 Bath 7x4 (28sft) 1 Kitchen 7x6.5 (48sft) Veranda 10x7 (70sft)

9 Home Layout: Three Bedrooms Plot Size – 42’x22’ 473sft covered Room1 11x10 (116sft) Room2 12x10 (123sft) Room3 12x10 (123sft) 1 Bath 7x4 (28sft) 1 Kitchen 7x6.5 (48sft) Veranda 10x7 (70sft)

Assumptions: Price is all-inclusive of land, infrastructure, construction, operational and contingency costs 25 acre parcel, land at PKR 5m per acre and civil infrastructure at 4.8m per acre (water, sewer, roads, power) 54% saleable area for residents and no land filling needed Mortgage provided at 70% loan to value, and subsidized interest rate of KIBOR + 1% (as at 21 May 2015, 3 year KIBOR at 7.66%) Introductory prices as of today only. Subject to inflationary changes over time. Plot size is 924 sq ft (22’ by 42’) One RoomTwo RoomThree Room Plot Sizemarla 3.40 Covered Area227sft350sft473sft * PricePKR 9.2 lakhPKR 11.0 lakhPKR 12.8 lakh Deposit30% Deposit AmountPKR 2.8 lakhPKR 3.3 lakhPKR 3.8 lakh Term10 years Monthly RentalPKR 8,000PKR 9,600PKR 11,100 Minimum Monthly Salary PKR 26,000PKR 30,000PKR 33,000 Layout1 Room, 1 Kitchen, 1 Bath, Veranda, Boundary wall 2 Rooms, 1 Kitchen, 2 Bath, Veranda, Boundary wall 2 Rooms, 1 Drawing room, 1 Kitchen, 2 Bath, Veranda, Boundary wall Pricing & Mortgage 10

Clients Developer/ Investor Banks/ Financial Institutions Local Government Provincial Government Federal Government NGOs Reduced cost Interest subsidy Options for mortgage Modern construction with all social infrastructure in place Organized and vibrant communities Provide initial land parcel investment Provide working capital Build homes at introductory average price of PKR 10 lacs as well as civil infrastructure Contribute towards construction of social infrastructure Manage sales and marketing Donate at least 1% of land to the community for long term sustainability Manage the communities for a period of 5 years Bring in NGO partners to manage social infrastructure Provide mortgages Streamline approval processes Offer optimal terms: DBRs Debt-to-equity ratios Tenures Penalties Provide external infrastructure Waive tax liability Facilitate regulatory approvals Waive processing fees Facilitate regulatory approvals Revise by-laws Double FAR in the for-profit 40% area of development Relax land use restrictions Waive tax liability where applicable Land: existing lands or assistance in acquisition Facilitation of transport where applicable Develop a framework to incentivize private investment Act as a facilitator, not an implementer Provide interest rate subsidies to clients Provide lands where possible Waive tax liabilities where applicable Protect foreign investment Manage all social infrastructure (schools, clinics, VTI etc) Manage community and organize formation of Community Development Organizations Manage shared infrastructure and facilities (parks, security, sewerage etc) An entire ecosystem is required to support this new way of developing affordable housing 11

Thank you Vibrant well managed affordable housing communities are possible when market participants work together