More than 827.6 million People Live in Urban Slums

Pesona Indonesia

slumThe housing crisis is now at boiling point. According to Habitat, worldwide more than 827.6 million people live in urban slums, and frighteningly by 2020 this is expected to grow to almost one billion.

As a result, each year more than 1.8 million young children die because of dirty water and poor sanitation. A new McKinsey report states that the affordable housing gap totals $650 billion a year; a figure that will continue to increase as urbanization spreads in cities across the globe.

To fill the gap and keep up with the pace of the soaring global population growth it is estimated that a construction spend of $9 to $11 trillion is required. There are ideas to reduce the sizeable costs involved: unlocking land supply, reducing construction costs, improving operations and maintenance, and lowering financing costs for buyers and developers are key strategies to tackle the calamitous housing shortfall.

Many governments have successfully executed land reclamation projects, for example, countries like Singapore, Denmark, The Netherlands, Egypt, Kenya, Japan, and China. Since the 19th century, Japan has reclaimed 25,000 hectares in Tokyo Bay alone. However, such work is not without obstacles. Environmentalists claim that such land reclamations irreversibly damage the local marine life, and fishers argue that their livelihood is at risk.

Reducing construction costs may be possible with the arrival of green building methods and materials. An affordable housing developer can save up to $24 per square foot by using structurally insulated panels (SIPs); which allow savings on materials and labour costs. But what about labour costs? Labour and labour-related costs comprise as much as 92 percent of a building’s design, construction, operations and maintenance charges. These cost savings accrue in increased productivity and reduced overheads.

Energy efficient retrofits like insulation and new windows can comprehensively reduce operation and maintenance costs. Concerning financing costs, further development in underwriting would encourage banks to make more housing loans available to lower-income borrowers. Governments could also help to reduce the funding costs of developers by making affordable housing projects less risky; they could do this by guaranteeing buyers for finished units.

“The global housing crisis needs immediate attention,” said Mart Polman—managing director of Lamudi Indonesia—the online property platform.

“If global governments don’t take action the consequences will be unimaginable,” said Polman. ***

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