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Housing Market for the Majority: Challenges and Opportunities for the Private Sector

The Inter-American Development Bank distributed on Thursday a study of the housing market for the 70 percent of the population that comprises the low-income majority in Peru.

The study seeks to identify private-sector opportunities in the housing market comprising people at the bottom of the country’s socioeconomic pyramid. Presented at a seminar in Lima attended by public- and private-sector experts and officials, as well as representatives of international agencies, the study indicates a population of one and a half million households, which would represent a potential market of $12.4 billion.

Representatives of key government agencies—such as the Ministry of Housing, Construction and Sanitation, the Fondo Mívivienda and the main municipalities—conducted a dialogue about the challenges and opportunities of this market with representatives of development companies, construction businesses, microfinance institutions, civil society and industry providers.

The report was prepared by Invertir-Instituto de Empresa and analyzes existing conditions in the Lima metropolitan area, Arequipa, Trujillo, Huancayo, Cuzco and Pucallpa, while also identifying a significant and unsatisfied popular demand and a business opportunity for companies in the housing sector. However, it also warned that implementation of suitable housing solutions requires such measures to be adjusted to differing needs, with management models and specific market strategies.

The study was financed by the IDB’s Opportunities for the Majority (OM) initiative, whose goal is to support strategies that make the benefits of economic and social development accessible to the majority of the population in Latin America and the Caribbean. To accomplish this, OM promotes and finances business models that link private sector companies with local governments and communities in order to develop and deliver quality products and services for low-income sectors.

In the market for housing for the poorest sectors, a dialogue has been opened to identify new business models that are profitable and sustainable, and that will give low-income families access to quality products and services while also incorporating communities into the productive process.