1. March 17, 2016 Affordable housing for all

2. THE CHALLENGE

3. Large unmet housing demand in LAC Housing deficit in LAC 37% 32% Urban 60% Rural 6% Quantitative 31% Qualitative The lack of infrastructure affects 21% of households Housing deficit, 2009 (percentage of households) ** Figures not available for the rural deficit in Argentina, Uruguay and Venezuela Source: BID, “Un espacio para el desarrollo. Los mercados de vivienda en LAC” (2012) Top 5 Nicaragua78% Bolivia75% Perú72% Guatemala67% El Salvador58% 15% lack sewage 9% lack water services 4% lack electricity Total deficit - Top 5 (% of households) Nicaragua78 Bolivia75 Perú72 Guatemala67 El Salvador58

4. Large unmet housing demand in LAC: the case of Peru 1.Peru’s estimated need for new housing is 1.32 million units 2.The formal supply can only cover 30% of the formation of new households 3.55% of households in need of housing cannot afford one 4.The production of housing for low income segments is not a priority for developers 5.8 out of every 10 new houses built in urban areas are classified as informal. 6.These factors, coupled with the lack of capacity and funding for local governments, contribute to the unsustainable growth of Peruvian cities

5. METHODOLOGY

6. Comprehensive framework to assess the status of the sector 5 City Planning Access to Land Infrastructure & Services Marketing and Finance Construction & Building Materials, Regulations Urbanization Edification Value Chain for the Production of Housing

7. Field work in 4 cities in Peru  International team of more than 14 professionals– urban planners, financial sector and housing specialists, lawyers  Mapping of relevant actors  Desk review of existing studies, data and regulations/legislation  Field Work– Lima (Comas, El Agustino), Chiclayo, Moyobamba and Huancayo  Meetings with the 3 key Ministry of Housing, Construction and Sanitation teams (urban planning, land and housing programs) and other stakeholders  Series of workshops – June – November, 2015

8. WHAT WE LEARNED

9. Urban Planning - resources and incentives to promote sustainable growth Limited capacity of the national government to influence local policies Decentralization without adequate capacity and institutional/financial mechanisms to manage land Lack of effective plans and urban planning tools Difficulty of coordinating service provision and paying for infrastructure costs Economically and socially fragmented cities Focus on generating incentive programs to align urban management with the objectives of national housing policy Empower cities with resources to leverage densification and zoning measures

10. Land management needs to play a key role in any housing strategy Developers are incentivized to sell housing units at a higher price, to optimize profitability Create incentives and requirements for the private sector to generate social housing The cost of serviced land makes well-located housing unaffordable for most Peruvian families Establish a legal framework for cities to manage land assets efficiently (e.g., Bogota) Mechanisms are needed to distribute the costs of serviced land, so that these may be recovered in different ways and not just through the price of social housing Social housing is unaffordable

11. LGs can leverage use of appropriate instruments to promote densification, finance infrastructure, and promote social housing City New housing units required Land required (in hectares with a density of 120 housing units per hectare) Lima519,0233,460 La Libertad82,294549 Piura60,195401 Arequipa58,569390 Callao51,968346 Total772,0495,146 Demand for land for housing in selected Peruvian cities City People per sq. km. in urban areas México D.F., México13,221 Rio de Janeiro, Brazil10,928 Santiago, Chile8,681 Quito, Ecuador4,059 Lima & Callao, Peru3,538 Population densities in Latin America

12. Income segments D & E are marginalized by mortgage lenders because they lack sufficient formal incomes and/or collateral A: 2% B: 12% C: 29% D: 36% E: 21% Financing $$$ Mortgage Loans Mortgage Credit Mi Vivienda Techo Propio Subsidy Purchase of a new house Self-construction Housing Solution Housing policy instruments should be diversified: subsidies are one part of the solution

13. An information platform is needed to activate interest and decisions from the public and private sectors  Develop a platform to consolidate relevant information for decision-making of actors by geographic region and income level of the population  National Housing Registry of Mexico, US Housing Starts data, etc Financing Individual credits Subsidies Promoter credit Housing Supply inventories Housing process Cost structure, prices Availability of Land Private Públic Serviced Restricted areas Cadaster Land use Infrastructure property taxes Housing Sector

14. An overarching national housing policy is needed to align objectives and clarify roles of all actors Articulate a national housing policy that aligns the interests and efforts of the various levels of government and the private sector Legal Framework Housing legislation Plans and programs Interministerial commission Cross cutting Linkage with Local Governments Regions Municipalities Financial system Fondo Mivivienda Private banks Development banks Citizens and the private sector

15. Thank you!

16. Invest more in Infrastructure for Housing Comparison of infrastructure costs for different projected urban expansion scenarios for Mérida, Mexico Source: World Bank, Mexico Urbanization Review, June 3, 2015 based on Centro Mario, Ciudades: Mérida Ciudades de Crecimiento, 2014