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Low-income housing market offers new business opportunities in Mexico

Growth of the housing market for low-income people in México will be a central theme during the BASE III Forum International, to be held in Mexico City June 29-July 1

The Inter-American Development Bank (IDB) estimates that the housing market for the base of the pyramid in México –those people whose income is below $10 a day– grew 25 percent between 2000 and 2010, reaching $40 billion annually. Mexicans spend more on housing (24 percent of their total spending) than on anything other than food. This immense market offers important business opportunities for companies looking for financial and social returns.

The housing market for the base of the pyramid in Mexico is varied and demands personalized products and approaches. Mexicans who live at the base of the pyramid spend on housing in the form of mortgage, rent, construction/self-construction materials, and credit for home improvement. Housing expenses grew 14 percent between 2000 and 2010.

Various companies and financial institutions in México and the rest of Latin America and the Caribbean are already serving base of the pyramid markets with positive returns. In Mexico, Aprecia Financiera (formerly Fomepade) provides long-term, unsecured housing loans through a payroll deduction program that targets the six million low-income state and municipal employees who don´t have access to federal housing programs. In 2013, Aprecia’s portfolio grew 130 percent due to the high demand.

Cemex’s Patrimonio Hoy is another business model for self-construction that has positively benefited more than two million people at the base of the pyramid in Mexico. The model has been exported to other countries in the region, benefiting more than 400,000 families.

Other examples in the rest of the region include Edyficar, in Peru, which provides loans for housing improvements through chains of hardware centers in Lima and Credifamilia in Colombia, the first regulated financial institution specializing in low-income housing.

The base of the pyramid in Latin America and the Caribbean consists of 406 million people representing a market of $760 billion a year. In Mexico the market amounts to $170 billion annually.

The IDB will host the BASE III Forum at Centro Banamex in Mexico City from June 29 to July 1 to discuss the market and development potential of the base of the pyramid in Latin America and the Caribbean. The Forum will bring together more than 1,500 companies, financial institutions, impact investors, opinion leaders, media, academics, and others to share lessons learned, challenges and strengthen the network of those who are active in this market. Panels will address sectors such as financial services, energy, water and sanitation, health and education, among others.