The resource titled "Catalytic capital investment as an enabler of affordable rental and cooperative housing - Investor Report" is published by the Periféria Policy and Research Center and authored by Zsuzsanna Pósfai, Csaba Jelinek, and Ivon Pavlović. It explores the potential for catalytic capital investments in the housing sector of Central and South-Eastern Europe (CSEE), emphasizing the unique challenges faced in this region compared to more economically stable countries.
💡The housing sector in CSEE exhibits low energy efficiency and quality, with significant housing deprivation affecting 20-30% of the population, including many middle-class households. Public housing is limited, while the private rental sector is underregulated and often too costly for the majority. Surveys indicate that over half of the population in four capital cities (Budapest, Belgrade, Ljubljana, Zagreb) desires changes in their housing situation, with 13-26% expressing openness to affordable rental and cooperative housing models.
🏠Current housing finance products are inadequate, as many individuals, even those with above-average incomes, find housing loans inaccessible. The report identifies two main barriers to establishing a non-profit housing sector: short loan maturities for organizations and a lack of financial tools preventing housing providers from expanding. It proposes a theory of change that involves introducing catalytic capital investments to fill the long-term finance gap, thus facilitating the development of affordable housing.
💰Catalytic capital investments are defined as patient, risk-tolerant, and flexible compared to conventional capital. The report emphasizes the need for a robust non-profit rental and cooperative housing sector to address the growing demand for affordable housing solutions. The research highlights that, since the 1990s, the privatization of social housing has led to a severe lack of affordable housing and increased societal hardship in the region.
🔍Methodologically, the research involved extensive desk research and surveys across eight CSEE countries (Bosnia and Herzegovina, Bulgaria, Croatia, Czechia, Hungary, North Macedonia, Serbia, and Slovenia). Key findings suggest that a significant portion of the population is open to secure rental arrangements. The report identifies the need for long-term housing finance instruments to stabilize the economy and improve housing conditions.
📊The research indicates that many financial institutions in the region primarily offer standard mortgage loans, which are unsuitable for large segments of the population. Factors such as employment status and required capital participation hinder access to affordable housing finance. The report concludes that the CSEE housing market requires long-term financing models to enable affordable rental and cooperative housing.
🌍The proposed solution involves catalytic capital to bridge the finance gap, working alongside traditional bank loans to support the development of affordable housing projects. This process necessitates the presence of intermediary organizations to manage capital and provide capacity development for housing providers.
🏗️The MOBA Housing SCE, a network of housing cooperatives, aims to act as a regional financial intermediary for rental-based and limited equity housing cooperatives. The MOBA Housing Finance Accelerator collects capital through donations and investments, financing members through short-term loans and potentially equity investments.
📈In conclusion, as the demand for affordable housing grows, particularly in CSEE, the introduction of catalytic capital investments is essential to create sustainable housing solutions that can meet the needs of the population while fostering economic growth and resilience.
