Pakistan - Developer Maximizes Returns Through Increased Community Engagement

The Ansaar Management Company (AMC), a real estate developer based in Pakistan, provides affordable, quality housing solutions to the lower-income segment in Pakistan. It builds communities in batches of housing units, stays engaged throughout the whole development and construction phase and supports the community development. Thus AMC manages to increase the value of its investment.

07.16.2015
 

Objectives

  • Providing innovative affordable housing solutions to the lower income segments of the Pakistani population
  • Supporting community development
  • Ensuring cash flow and return-on-investment

Summary

Greenfield housing projects are typically divided into three distinct phases. Firstly, all the land is acquired and cleared, then the infrastructure is installed, and ultimately homes are constructed. Once this is completed, the properties are sold and the developer moves on to the next project. This procedure is often accompanied by difficulties in mobilizing sufficient funds. Further there is a risk that new communities end up as ghost towns.

AMC offers a new approach of housing development by combining incremental financing and long term engagement. Considering that houses in a vibrant neighbourhood are more attractive than in a new development with few residents, the company builds communities in batches of housing units. It stays engaged throughout the whole development and construction phase and supports the community development for five years. Thus AMC increases the value of the investment.

The business model is based on the fact that occupation of a critical mass of homes will have a positive impact on the price of the remaining houses in a development. Hence, 51-70% of the housing units are sold at cost rates, under the condition that residents cannot sell, rent, or leave the unit vacant for a period of five years. This ensures that the community constitutes a sustainable and well-functioning social unit from the beginning.

Results

The lower income segments of the Pakistani population are provided with affordable housing solutions and enabled to live in more vibrant and empowered communities. The risk for investors is reduced too.