The world’s current supply of affordable housing won’t be enough to keep up with the demands of tomorrow, says Bloomberg in a recent article, citing data disclosed at the 2014 CityLab Conference.
Replacing the world’s substandard housing and building affordable alternatives to meet future global demand would cost as much as $11 trillion, initial findings in a McKinsey & Co. report to be released in October show.
But the shortage of decent accommodation for as many as 1.6 billion people also presents an opportunity for construction companies and mortgage lenders.
By 2025, the the market for affordable-home loans could be worth as much as $400 billion a year.
“The global consulting company says governments should release parcels of land at below-market prices, put housing developments near transportation and unlock idle property hoarded by speculators and investors,” Bloomberg says.
About 330 million households — about 1.2 billion people — now struggle with substandard housing, a number that may increase to 440 million in 11 years, McKinsey forecasts.
“In Lagos and Bombay, two of the world’s fastest-growing cities, the issue of inadequate housing is particularly grim as both emerging metropolises are poverty-ridden,” Bloomberg days, noting that the affordable-housing gap amounts to more than 10% of each city’s economic output.
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Written by Cassandra Dowell