• How can global industry leaders help address affordable housing crisis.
  • Business leaders urged to take a 'holistic view'.
  • Environment, community, employee quality of life - all factors.

The housing sector has a far-reaching impact on our global economy - linking suppliers with economic sectors, product and service providers and operators, to the demand side of financing and homeownership throughout the housing value chain. Creating a sustainable market to fill the multi-trillion dollar global affordable housing gap requires an eco-systematic paradigm shift. How can global corporate leaders, from legacy industries to big tech companies, all contribute to this new paradigm at profit and at scale?

housing bubble rents prices property global
Housing ratios show some countries are on an unsustainable path
Image: Niraj Shah, Bloomberg Economics

Several large corporations including Microsoft and Apple have made substantial commitments toward addressing regional affordable housing shortages through their Corporate Social Responsibility (CSR) programs in 2019. While CSR and philanthropic efforts can make a sizable impact, all businesses can play an important role in re-constructing the housing value chain while at the same time enhancing their core businesses and values.

As we all know, businesses have tremendous influence on how buildings are deployed and used. Businesses influence where their employees live. They influence land use. They influence operations upstream, downstream and side-stream from their locations. Taking a holistic community centered view, business communities might be more creative in leveraging their power to optimize performance beyond the structures within their fence-line. By taking a wider perspective, businesses have unique potential to create value and new synergies within the communities they serve.

Below are some concepts for global corporate leaders to address the challenges in affordable home delivery value chain, and make a positive impact on business performance, environmental footprint, community development, and worker quality of life.

holistic housing sector infrastructure finance homes building
A holistic and multidimensional view of the housing sector
Image: Claudio Acioly Jr, UN-Habitat

Supply side

Major population centers where businesses are located face acute housing shortages, where the cost of land is prohibitive. Corporations, by their community influence and purchasing power, could acquire quality housing at an affordable price lowering the overall household cost for the employee, and also create housing at the right location as integral part of the business communities.

Public-private partnerships: Businesses and local governments could consider unlocking land supply for effective home delivery through Public-Private Partnerships (PPPs). PPPs could enable partners from the private sector to build housing on public land. Coupled with government incentives to include affordable units, businesses can provide housing for its direct employees and for service providers they rely on.

Campus model: One can envision a model where businesses can catalyze for formation of clusters in close proximity to their sites, thus reducing commuting times, providing services and improving neighborhoods where personnel live. This model is well understood and accepted around the world to address skilled labor shortages it is similar to the university campus model where a local ecosystem is created for a common purpose. Consider the value a business could bring to its lower income employees. This ideally creates a small community cluster, with common needs, greater commitment to the business and a more stable environment among other benefits. This model is proven useful for employee retention.

Prefabrication and automation for housing production: It is becoming increasingly evident that an industry approach is needed to deliver quality housing quickly at the affordable cost and at scale. Today, technology has reached a tipping point where solutions like prefabrication, coupled with intelligent manufacturing of industry 4.0, can scale to mass-market. As a proactive strategy to diversify business portfolios, companies operating in non-construction industries may consider collaboration with the housing sector by applying their knowledge and technologies, including production line automation, procurement, logistics, design and management systems, which already are applied successfully in their core businesses.

What's the World Economic Forum doing about the future of cities?

Cities represent humanity's greatest achievements - and greatest challenges. From inequality to air pollution, poorly designed cities are feeling the strain as 68% of humanity is predicted to live in urban areas by 2050.

The World Economic Forum supports a number of projects designed to make cities cleaner, greener and more inclusive.

These include hosting the Global Future Council on Cities and Urbanization, which gathers bright ideas from around the world to inspire city leaders, and running the Future of Urban Development and Services initiative. The latter focuses on how themes such as the circular economy and the Fourth Industrial Revolution can be harnessed to create better cities. To shed light on the housing crisis, the Forum has produced the report Making Affordable Housing a Reality in Cities.

Demand Side

Centered on the premise of “empowerment” for the households to advance from being dependent to independent, there are approaches for corporations to contribute in helping their employees afford housing. With the digital economy, we believe there is an opportunity to revisit the traditional employment model. Large businesses face ever increasing challenges to improve agility and adaptability to take advantage of emerging opportunities.

Housing as part of employee compensation: Many successful organizations have long optimized the usage of variable resources to achieve needed flexibility. Taking performance to the next level, business leaders might consider applying similar concepts to the permanent workforce. With respect to housing, employers often absorb expensive relocation costs to move personnel to new geographies where their talents are needed. If however, the company were to provide housing for all employees as a part of their compensation package, greater mobility might be achieved with significant reduction in relocation costs.

Low-entry-cost model: This is a concept to adapt the home ownership model to be more consistent with shared economy concepts. Businesses might consider a model where up-front home ownership costs are reduced in exchange for providing access to certain household data and securing alternative revenue streams. Households, with their increased connectivity, can generate a longer-term revenue stream by providing data such as power consumption requirements, appliance performance and other services.

Pay-for-service model: With the increasingly connected households, businesses might consider developing a “pay for service” market for high priced, energy consuming products such as HVAC systems and appliances. It is well documented that low income families tend to live in households with poor energy efficiency. Business models where they can avoid the initial high cost investment for energy efficient upgrades through usage fees that spread the cost over time might encourage them to retire old, poor performing appliances in favor of modern ones.

We submit that successful companies will need to undertake the challenge to consider the impact of global urbanization on employee households. With a broader perspective, businesses are in a unique position to create a mutually beneficial synergy with the low-income housing community.