What are the risks of affordable and inclusive housing development?

2 Financial Risk

Another major risk of affordable and inclusive housing development is the financial risk. This refers to the uncertainty and volatility of the project's costs, revenues, and returns. For example, affordable and inclusive housing projects may have higher upfront costs due to land acquisition, design, construction, and compliance. They may also have lower revenues due to rent restrictions, occupancy limits, and tenant selection. Moreover, they may face higher operating and maintenance costs due to the quality and durability of the materials and amenities. Developers need to have a realistic and robust financial plan and budget that accounts for the various sources and uses of funds, as well as the potential risks and contingencies.

4 Social Risk

A fourth risk of affordable and inclusive housing development is the social risk. This refers to the possibility that the project may encounter opposition or conflict from the stakeholders or the community. For example, affordable and inclusive housing projects may face resistance from the existing residents, neighbors, or businesses who may perceive them as a threat to their property values, safety, or identity. They may also face challenges from the potential tenants, partners, or service providers who may have different expectations, interests, or values. Moreover, they may face issues from the media, activists, or politicians who may criticize or scrutinize the project. Developers need to engage and communicate with the stakeholders and the community in a transparent and respectful way that builds trust and support for the project.

5 Operational Risk

A fifth risk of affordable and inclusive housing development is the operational risk. This refers to the possibility that the project may experience problems or failures in the execution or management of the project. For example, affordable and inclusive housing projects may face delays or disruptions in the design, construction, or delivery of the project due to unforeseen events, errors, or accidents. They may also face difficulties or disputes in the leasing, maintenance, or administration of the project due to legal, contractual, or technical issues. Furthermore, they may face risks or liabilities in the safety, quality, or performance of the project due to defects, damages, or complaints. Developers need to have a clear and effective operational plan and strategy that ensures the quality and efficiency of the project.

6 Innovation Risk

A sixth risk of affordable and inclusive housing development is the innovation risk. This refers to the possibility that the project may not achieve the desired outcomes or impacts due to the lack of innovation or adaptation. For example, affordable and inclusive housing projects may not be able to meet the current or future needs or demands of the housing market due to the obsolescence or irrelevance of the design, technology, or service. They may also not be able to create or capture the value or benefits of the housing project due to the inefficiency or ineffectiveness of the business model, strategy, or partnership. Moreover, they may not be able to sustain or scale the housing project due to the complexity or uncertainty of the environment, system, or network. Developers need to have a creative and flexible approach that embraces innovation and adaptation in the project.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?