Tag Archives: MENA

Promoting a Rare Breed: Private Nonprofit Housing Developers in the GCC

This piece was originally published by Jadaliyya, an ezine produced by the Arab Studies Institute. Jadaliyya combines local knowledge, scholarship, and advocacy to better understand the Arab World and to fulfill its dedication to discussing the Arab world on its own terms. The original article can be found here.

           

By Maysa Sabah Shocair, AHI’s Managing Director of the GCC Region

While working as a Project Manager at the Fenway Community Development Corporation (CDC) in Boston and as a Consultant to Phipps Houses in New York City, I experienced firsthand how nonprofit developers can contribute to preserving housing affordability in central locations. Fenway CDC builds and preserves housing and champions local projects that engage the entire Fenway community in protecting the neighborhood’s economic and racial diversity. It has operated since 1973 and has developed nearly six hundred homes, housing approximately 1,500 low and moderate-income [1] residents, including those with special needs. In addition, Fenway CDC has supported residents through offering job placement and career advancement services, building playgrounds, running after-school programs for teens and operating a center for seniors. Similarly, Phipps Houses develops, owns and manages housing in New York City. Since its  founding in 1905, it has developed more than six thousand apartments for low- and moderate-income families, valued at over one billion US dollars. Phipps Houses manages a housing portfolio of nearly ten thousand apartments throughout New York City. In addition, it serves over eleven thousand children, teens, and adults annually through educational, work readiness, and family support programs.

Now that I am working in the Gulf Cooperation Council (GCC) as an affordable housing consultant for several public and private entities, I often wonder: Could private nonprofit housing developers, like the Fenway CDC and Phipps Houses, make an impactful contribution to bridging the supply and demand gap in affordable housing in the GCC for both citizens and non-citizens? Could the experience of other countries with nonprofit housing developers be distilled and adapted to the GCC states?

To answer these questions, I will first discuss the main attributes of nonprofit housing developers, followed by a discussion on the shortage of affordable housing for citizens and non-citizens in the GCC and the resulting need for nonprofit housing developers. I will then recommend strategies to enable the growth of nonprofit housing developers and end with a few concluding remarks. 

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Domed roofs in Haram City


Nonprofits Housing Developers as Mission Entrepreneurial Entities

In its 2010 landmark study Mission Entrepreneurial Entities: Essential Actors in Affordable Housing Delivery, the Affordable Housing Institute (AHI) defined Mission Entrepreneurial Entities (MEEs) as “private nongovernment entities that are in the business of making housing ecosystemic change by doing actual transactions valuable in themselves that also serve as pilots and proof of concept.” MEEs could be Non-Governmental Organizations, Community Development Corporations, or Housing Associations, labels that have sometimes been used interchangeably. The study profiles twenty-three MEEs in the United Kingdom and the United States, where, in both countries, there has been a steady migration from entirely publicly managed and operated systems to hybrid public-private models, with MEEs as key delivery mechanisms.

According to the study, the three main attributes of MEEs are: (i) being mission oriented, since their goal is impact, not just profits; (ii) entrepreneurship, taking risks and persuading established institutions, including governments, to approve proposals, provide capital, etc.; and (iii) self-containment, because sustainable MEEs must make profits and maintain a positive cash flow. However, generated profits are used to further the purposes of the organizations instead of being distributed to managers and shareholders.


MEEs also share the following strengths:

·         Willingness to serve populations that the private for-profit sector cannot or will not serve, including the hardest-to-house residents;

·         Commitment to providing affordable housing to lower income people for the long term;

·         Building strong connections with residents and the communities they serve;

·         Commitment to providing various social services that lower income or special needs residents may require;

·         Potential for accessing affordable land, buildings and funding through governments and philanthropic entities or individuals;

·         Commitment to seeing projects through both during their early and post-delivery phases.

Given the potential of MEEs to serve populations that are not served by private or public housing provision, this essay discusses the potential relevance of this model to the GCC countries. This interrogation is critical at a time during when many GCC countries are facing a shortage of housing for low and moderate income households. It is also a time in which we are witnessing the emergence of institutionalized charitable giving that could be in part harnessed to help with housing provision. These conditions are creating a ripe environment for the growth of nonprofit housing developers, with the much needed support of the public and private sectors.

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What we’re reading: Rebuilding Gaza

Addressing ecosystemic housing challenges and gaps – which all cities and countries face – is difficult when the housing units themselves are destroyed. What we’re reading this week – a recent report from the global humanitarian response coordinator Shelter Cluster on the situation in Gaza – reminds us of the tragedy of both natural and, in this case, man-made disasters that cause people to lose their homes.

Although the cease-fire between Israel and the Palestinian Authority has been in effect for nearly a month now, the region is just now taking definitive steps toward rebuilding Gaza after the most recent conflict. According to Shelter Cluster’s recent report (available for download as a pdf here), 17,000 housing units were destroyed in the most recent conflict between Israel and Palestine. This is on top of 5,000 housing units still in need of repair from prior conflicts, as well as a general shortage of about 75,000 units. These numbers include residential buildings only, without taking into account the schools, power plants, and other public infrastructure damaged during “Operation Protective Edge,” Israel’s latest military operation in Gaza.

Much of this housing shortage can be attributed to restrictions on importation of cement, aggregate, steel, and other building materials into Gaza. Past use of these materials to construct the tunnels between Israel and Gaza has made the Israeli government reluctant to allow further importation, so oversight of the use of these materials has been a major point in the recent negotiations between Israeli and Palestinian authorities.

palestinian rubble

A Palestinian woman in the rubble of her home, destroyed in the conflict this summer. Credit Said Khatib/Agence France-Presse — Getty Images, New York Times.

Despite Shelter Cluster’s grim prediction that it will take 20 years to rebuild Gaza after this most recent conflict, journalists report that talks between Israeli and Palestinian authorities about rebuilding have been positive. Last week, the UN revealed the details of a temporary deal regarding construction struck late on September 16. As the New York Times reported:

“…Robert H. Serry, the special envoy for the Middle East peace process, told the Council that he hoped the deal would lead to a broader agreement on opening border crossings to Gaza and on ending severe restrictions on imports to the Palestinian territory, where the economy was stagnating before the 50-day war this summer.

The Palestinian Authority, led by President Mahmoud Abbas, will have “a lead role in the reconstruction effort,” while United Nations monitors will ensure that reconstruction materials are not “diverted from their entirely civilian purpose,” Mr. Serry said.

…“Arriving at this agreement has not been without its challenges,” Mr. Serry said, according to a prepared statement. “We consider this temporary mechanism, which must get up and running without delay, as an important step toward the objective of lifting all remaining closures, and a signal of hope to the people of Gaza.”

Unfortunately, housing is just one of the issues Palestinians will face as they seek to rebuild Gaza. A recent World Bank report details several obstacles, including restriction of movement, economic recession, and an energy crisis, which will have to be dealt with before Palestine is able to build a resilient economy.

The Unique Demographics of GCC Countries and their Impact on the Housing Market

By: Rudayna Abdo, AHI Urban Planning Adviser

There has been a magnified interest in housing development across the GCC (Gulf Coast Countries) in the last few years to which I account there being four direct or indirect major factors:

 

§    Population growth. The population across the GCC has grown six-fold in the last 4 decades, from 7.8 million in 1970 to 46.2 million in 2011 [1].

§    Rapid urbanization. The Gulf being one of the most urbanized areas in the world with 75% of people living in cities [2]. This growth was a result of the oil boom and its associated implications on employment, wealth and social change, and the ensuing migration of rural/desert dwellers to large cities. 

§    Rising unemployment. Youth unemployment in the Arab world is now at 25% and in the coming decade, the Arab world needs to add 75 million jobs [3] – an increase of 40% on today’s numbers.

§    Political conflict.It is fair to say that some governments have responded to the internal political tensions spurred by the Arab Spring by expanding or declaring new housing development mandates to appease their citizens.

 

The provision of affordable housing is really the only concern – it is the gravely undersupplied segment, with high-end housing being oversupplied in places like Abu Dhabi. Estimates for the shortfall in Saudi Arabia, for example, start at 400,000 (according to Jones Lang LaSalle; “Why Affordable Housing Matters” Sept. 2011) but much higher figures than that have been quoted by some sources. In Bahrain, the JLL Sept. 2011 figures report a 40,000 shortfall, 20,000 in the UAE and 15,000 in Oman.

 

Abu Dhabi villa

An Emirati villa in Khalifa City A, Abu Dhabi

 

The mandate of the GCC governments is to deliver housing for their nationals. However, it is interesting to take a quick look at the demographics of these countries.

 

The most populous of the Gulf countries is the Kingdom of Saudi Arabia, with a population of 28.5 million [5]. The next by a large margin is the UAE at 8.5 million, followed by Kuwait at 3.7 million, Oman at 3.1 million, Qatar at 1.8 million and tiny Bahrain at 1.3 million. The share of expatriates in these countries, however, varies widely to a low of about 30% in Saudi and Oman, to a staggering 85%+ in Qatar and the UAE (according to certain estimates [6]). The overall share of the expat portion in the last ten years has moved from 36% (2001) to practically half of the entire population: 48% in 2011 [7]. This is a significant portion of the population which has divergent housing needs depending on its economic and social standing.

 

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To look at it in general terms, the housing for the full spectrum – nationals and expats – falls into the following categories:

 

Housing for nationals:

  • Government housing – for middle and low income nationals. This is the segment of the population that can be a significant portion of the population (e.g. Saudi) or a small portion (e.g. UAE) but is largely driving the housing development mandate.
  • Private housing –for high income nationals. This segment of the population can afford and cater to its own housing needs. It is not clear whether this segment benefits from the national housing programs (free land; potentially free house).

multifam Abu Dhabi CBD (1)

Low and middle-income multi-family housing in Abu Dhabi’s CBD


Housing for expatriates:

  • Manual workers – who are typically in the country on a two or three year visa and whose housing needs are provided by their employer in camps (the type and quality of this housing is another topic by itself).
  • Domestic workers – who typically reside with their employer and thus have their housing needs met.
  • Low to middle-income singles and families – see below.
  • High income families – who can navigate the fluctuating market and, even if inconvenienced, can survive the peaks and troughs of housing prices.

 

It is the low and middle income bachelors and families that fall through the cracks in the above equation. This is the segment of the population that must provide its own housing yet is at the mercy of the supply and price game. It is also the population segment that is, by and large, being entirely ignored by policy makers. It is these expats who make the Gulf countries run and operate and without whom services will severely suffer. If policy makers don’t address their housing needs they may have to contend with much larger concerns in the years ahead.

Mussafah labor camp-Hoagland

A labor camp in Mussafah, Abu Dhabi