Focus: Exporting successful policy frameworks

Quality and Quantity

Oct. 14, 2021

Urban sprawl is the bane of many emerging markets, where needs-must economics result in irregular residential development that inevitably runs into problems with utilities and legal status.

A shortage of appropriate housing for vulnerable social groups remains problematic even in developed markets, giving rise to the so-called “post-code" predictability of an individual's life trajectory. Yet, emerging markets also contend with the lingering social ills of unregulated urban sprawl that have far-reaching social consequences, including overcrowding, remoteness from healthcare and education, and the concentration of unemployment and consequent lack of economic participation. Meanwhile, the COVID-19 pandemic has severely exacerbated the plight of the poorest, numbering around 113 million people across Latin America, almost a quarter of the total. In Colombia, the situation is compounded by the arrival of thousands of refugees from Venezuela, which further underlines the urgency of urban development policy.

Sharing the cost

As we discover in this chapter, Colombia has posted record advances on the urban front of late through shrewd policy and long-term thinking. In a TBY interview, Minister of Housing, City, and Territory Jonathan Malagón says current housing policy is focused on “two key issues: significantly reducing the quantitative housing deficit, thus consolidating a country of homeowners, and reducing the qualitative deficit in order to guarantee a decent life for Colombians whose housing conditions are inadequate."
Indeed, as of 2Q2021, the state had provided over 107,000 subsidies to buyers of social housing, while the legal framework, notably the Housing and Habitat Law, had enabled 2020 to become a “record year in sales volumes with [over] 200,000 units sold." This has benefitted around 500,000 families, with a further 100,000 targeted by the National Development Plan. Peak allocation came in March of this year at 5,519 subsidies delivered, due to a successful recipe of “lower interest rates, the digitalization and acceleration of the home buying process, the government's role as co-signer, and the changes that allow access to credit, such as in the Debt to Income (DTI), which went from 30% to 40% in purchasing of social housing."
Successful state initiatives frequently opt for the advantages of private-sector participation, and in Colombia land has been offered at favorable terms for development, with “over 8,500ha of land available [while] we have issued 23 decrees and a Housing and Habitat Law that fosters the development of the sector," all of which contributes to the “orderly growth of cities." Such is the momentum that GDP growth in the local construction sector is forecast as over 10% for both this year and the next, with an employment headcount of roughly 1 million.

The Dominican Republic: addressing identical issues

Persistent low incomes in many emerging markets leave housing needs to be met nationally by individuals or communities, rather than by costly, yet higher quality and official, building solutions. This is the source of the unregistered urban sprawl and the inadequate social conditions that inevitably follow. The Dominican Republic has a population just north of 9 million, 10% of which lives below the poverty line. Meanwhile, its housing deficit is at around 2.2 million housing units, 60% being qualitative, whereby tellingly the number of inadequate houses actually exceeds the number of families without homes. That number is swelling annually by 50,000-60,000 homes on average.
In response to the sobering above-mentioned numbers, earlier in 2021 DR President Luis Abinader introduced the Happy Family National Housing Plan (PNVFF) in Hato del Yaque with a goal of providing 62,000 over four years. The PPP scheme earmarks benefitting 310,000 people directly. The state itself is set to invest a total of USD200 million over the project term, with 11,000 apartments built simultaneously nationwide to include Los Alcarrizos, Azua, Santo Domingo East, Higüey, Santo Domingo West, Sabana Perdida, La Romana, Pedro Brand, and San Pedro de Macorís. Close to 0.5 million jobs are estimated to be created as a result.

La Nueva Barquita

Emblematic of the Dominican Republic's social housing drive is the La Nueava Barquita project, overseen by state body URBE. It sets a high bar for territorial development and social improvement by rehabilitating neighborhoods around the Ozama Basin, the country's fourth largest. The Ozama river, at 148km, bifurcates the capital Santo Domingo before reaching the Caribbean Sea. Located in Sabana Perdida, Santo Domingo Norte, this comprehensive housing and social improvement solution encompasses La Barquita Park and Polytechnic urban regeneration and the Aquabus cable Car mass public transport solution for remote neighborhoods around the Ozama Basin of Santo Domingo.
To put matters into perspective, then, the final word goes to Jonathan Malagón, who points out that, by official estimates “one in five homes that will exist in 2030 have not yet been built. This is an opportunity to rethink the sustainable and orderly urban development of the country we dream of." It would also seem to be a no-brainer template for successful reproduction in the Dominican Republic and far beyond.

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