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Low Income Housing: Supply Ecosystem

Low Income Housing: Supply Ecosystem. Deloitte Consulting LLP. April 2013. Challenges in the Supply Ecosystem Expressed needs and latent needs. Rising Construction Costs. LIH developers struggling with rising costs of labor and material

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Low Income Housing: Supply Ecosystem

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  1. Low Income Housing: Supply Ecosystem Deloitte Consulting LLP April 2013

  2. Challenges in the Supply EcosystemExpressed needs and latent needs Rising Construction Costs • LIH developers struggling with rising costs of labor and material • Construction costs are reported to have increased by 15-20% on yearly basis • LIH is a ‘low-margin’ business. Cost increases have forced several developers to relook at their LIH plans • While developers have not expressed this need, it is imperative to build for scalegiven the huge supply-demand shortfall in this segment Building at Scale Environmental Impact • Developers should start thinking about long-term environmental impact of construction materials

  3. Market Response to these Needs & Challenges • Developers stagger sales, reduces risk of construction cost increases and maximizes realization • Multiple developers have expressed interest in using fiber walls, pre-fabs, fly ash bricks, etc • However, nervous about their capabilities and/or customer’s reaction Rising Construction Costs • Dedicated LIH Developers are building systems and capabilities • Land teams constantly searching for land • Sales teams from professionals in the two wheeler business • Most developers are “prime” as contractors are unreliable • A few players like VBHC & M&M are using Aluformto ensure consistent quality, reduce timelines and dependence on labor Building at Scale Environmental Impact • Very little activity; need to make this an industry standard more

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