The market
The capital needed for social and affordable housing worldwide is estimated at $3 trillion. Investments in housing for people with special needs in 2010 ranged from $300 billion to $500 billion. Although data remains scattered and difficult to compare globally, the market is growing, and the return on investment is higher than that of most commercial loans. Because social housing benefits from both government subsidies and guarantees, its financial performance has attracted private investment.
Social housing programs in Brazil offer a glimpse into the scale of global demand. By 2014, Brazil will have built 2 million additional social housing units at an average cost of €15,000, representing a public investment of €30 billion. However, demand in Brazil is estimated at 5.6 million housing units, meaning that even with this extraordinary effort, over 60% of the population remains without housing. This creates significant room for private initiatives to complement government action. South Africa, at the end of apartheid in 1994, had a stated goal of building one million additional homes, but today it only meets 14% of its housing needs, indicating a long road ahead.
Investment in social housing is the only sector of the real estate construction industry characterized by global growth with an attractive return on investment (ROI). While a commercial real estate developer would expect a return on invested capital of 25 to 35%, state-supported housing programs generally offer only 10%. However, this return far exceeds that of other low-risk investments, and consequently, these construction programs attract a flood of investors seeking stable and secure returns. The Brazilian government is capitalizing on its injection of funds into social housing. The state's commitment to easing demand, coupled with the subsequent sharp increase in land values through the conversion of slums and marginal lands into new communities, allows for generous dividends to be paid to foreign investors. Capital gains in real estate allow local communities to become "bankable," while the returns offered to foreign investors exceed all market norms.
Innovation
Affordability is defined as the median price of a house divided by the median income. A multiple of 3 or less is considered affordable, and a multiple of 5 or more is unaffordable. Hong Kong is the most expensive city with a multiple of 11.4. Architects and urban planners have devoted considerable time and effort to designing affordable housing, focusing primarily on reducing costs, particularly by eliminating labor through prefabricated construction systems. In Brazil, social housing still costs €15,000 per unit, while in India, the capital investment in a house can be as low as €4,500. This minimum standard of housing for an Indian government stands alongside slums, but it is unlikely to meet the basic standards tolerated by a Brazilian. One of the main problems is that social housing consumes enormous volumes of concrete and cement, while the roofs are generally made of zinc sheets. In addition to questionable comfort, this is a major contributor to greenhouse gas emissions. Colombian architect Simon Velez and renowned engineer Marcelo Villegas both benefited from the pioneering work of Oscar Hidalgo, a master of bamboo architecture. They realized that when the Spanish colonized the Andean highlands of Colombia and Ecuador, they did not encounter rainforests, but rather discovered massive bamboo forests dominated by Guadua angustifolia, a giant grass that could produce up to sixty 25-meter poles per year for seventy years. Bamboo is an excellent building material, as evidenced by hundreds of colonial houses over 200 years old, though this is still minor compared to the oldest Chinese bamboo structures, said to be 3,000 years old! So Simon and Marcelo studied how to join bamboo poles to "dance to the rhythm of the Earth." They embarked on a journey to combine beauty and safety. Simon understood that bamboo needs protection from the sun and rain, while Marcelo devised an ingenious assembly technique, filling the bamboo poles, connected by an iron rod, with cement injected through a small hole. When Professor Dr. Ing. Klaus Steffens of the German Institute for Non-Destructive Stability Studies, affiliated with the Technical University of Bremen, conducted the same tests on the ZERI Pavilion built in Manizales, as he had done for the Reichstag (German Parliament) in Berlin at the request of Sir Norman Foster. He was so impressed that he committed himself to obtaining a building permit for this natural material and innovative technique. The ZERI Pavilion at the 2000 World Expo demonstrated that bamboo is not only a plant-based steel that moves with the earth, but it is also beautiful while simultaneously sequestering carbon dioxide. These are multiple advantages similar to those of the blue economy.The first cash flow
Simon quickly converted the success of his designs into social housing programs in response to the earthquake that struck his native coffee-growing region (Eje Cafetero), donating the designs to the local government for free use. Sixty-five bamboo poles are enough to build a 65-square-meter, two-story house with a huge balcony and a large overhang. This building costs less than $15,000 to construct, and while most people would consider bamboo a symbol of poverty, this house with a balcony—a symbol of the upper middle class—transformed the model construction into a highly desirable home. Ten years after these pioneering buildings were scattered throughout Latin America, bamboo houses have become one of the most promising breakthroughs in carbon-neutral building design, for both the rich and the poor.The opportunity
Simon and Marcelo never bothered to patent their inventions; instead, they freely shared their ideas, spending considerable time with workers who were often illiterate, transferring their knowledge into practical building techniques. The 41 bamboo carpenters who, in five months, built the ZERI Pavilion in Germany using only hammers and chisels, all returned home with a master or apprentice carpentry diploma. As this bamboo pavilion was a first in Germany, and such a masterpiece, it deserved to have its masters. Over the next decade, thousands of buildings emerged worldwide using this open-source technique as a tool for architectural innovation, as summarized in the book "Grow Your Own House.".
The Japanese company Taiheiyo Cement then added a roofing and wall system to this sustainable design portfolio, based on 75% bamboo and 25% cement, pressed together to form carbon-neutral bamboo/cement sheets that are now widely used in Japan's high-speed rail stations. Today, over a billion people live in bamboo homes, and for the first time, social housing doesn't have to replace natural building materials with concrete, cement, and zinc. Instead, there is a competitive option for engaging in social housing that is a net-carbon sink thanks to another invention (see case 45) that gives structural bamboo a long functional lifespan. Even better, these designs have led to large-scale reforestation programs.
Taiheiyo Cement's bamboo leaf project required planting 2,000 hectares of bamboo in the highlands surrounding Jakarta, Indonesia, which is continuously harvested to provide the 2.5 mm long fibers. Recent estimates suggest that 500,000 hectares of barren land have already been replanted with bamboo, without any subsidies. While this adds jobs to the market and carbon to the equation, few realize that bamboo forests mitigate the urban heat island effect, lowering temperatures by up to ten degrees (pandas and tigers know where to find shelter from the heat), and contribute to hydrological cycles through the spontaneous formation and renewal of streams. A social housing program that provides additional drinking water and lowers the Earth's temperature is further proof of the power of the blue economy.
