SDG Impact Finance Initiative, with the support of Convergence, awarded a feasibility study grant to Reall for the design and launch of its Green Affordable Housing Finance (GAHF) solution, to help alleviate the deeply gendered global housing challenge and to address the urgent need for climate-smart solutions for the building sector.
Urban populations are expected to grow by 2.5 billion by 2050, with 90% of the growth coming from Asia and Africa. This expansion in population fuels a heightened demand for safe and affordable housing, with an estimated requirement for 300 million new homes by 2030. However, this burden is not equally felt across all groups. In emerging economies, women bear a disproportionate burden of the housing crisis. For example, women often find themselves in insecure living situations or reliant on their male partners for housing access, leaving them vulnerable to gender-based violence and forced eviction. Furthermore, existing housing laws and policies, which are praised as 'gender-neutral,' often overlook pre-existing inequalities and fail to address the specific housing needs of women. Moreover, there exists a gap in the conventional lending system that prevents women from accessing finance-secure homes, despite evidence suggesting that women are more reliable borrowers than their male counterparts. Simultaneous efforts are crucial in addressing housing challenges and tackling gender inequalities in emerging markets.
GAHF offers a blended finance solution designed to catalyze the development of local, self-sustaining housing finance ecosystems. These systems offer viable pathways to eco-friendly and affordable homeownership, focusing on empowering women. The solution is unique as GAHF tackles the challenges on both the supply and demand fronts.
GAHF was previously incubated and endorsed by the Global Innovation Lab for Climate Finance, where Reall received technical assistance support. The feasibility study grant from the SDG Impact Finance Initiative will help Reall refine and market test the design of GAHF.
Design question and learning potential for the market: How can blended finance empower women through homeownership while creating a sustainable local housing finance ecosystem?
GAHF employs a dual facility structure, encompassing an Enabling Environment Facility (EEF) and a Guarantee Facility. The solution is unique in that it targets the gender housing challenge from both a supply and demand perspective. On the housing supply side, the EEF aims to establish the operating conditions needed to enable high-impact local housing developers. A technical assistance (TA) piece will also be offered to developers and local financial institutions (LFIs). The Guarantee Facility will launch subsequently, to de-risk construction loans, as well as to incentivize local lenders and LFIs to gain comfort with green and gender-inclusive construction.
On the demand side, the guarantee facility will be extended to de-risk mortgages used for homeowners to purchase these homes. Concessional terms for loans to joint/women-headed households to expand credit access will be available.
Through this innovative whole-of-value-chain approach that addresses both supply and demand side challenges of affordable housing, GAHF aims to help build track records and lenders’ confidence in targeted regions and joint/women-headed households. Ultimately, it will gradually be phased out, leaving a housing finance ecosystem independent of concessional support.
