Market Trends of Latin America Residential Construction Industry
This section covers the major market trends shaping the Latin America Residential Construction Market according to our research experts:
Social Rental Drive
In general terms, alternative forms of tenure such as the rental market for low-income families have not been fully developed in Latin America. For example, Europe applies different models where the state offers benefits (soft loans, subsidies, tax exemptions, concessions on built surfaces, etc.) to various associations and private companies created for this purpose, with the commitment to rent homes at below-market values for low-income families.
A social rental policy that can be applied in a generalized manner requires a long-term commitment from the state to the private sector. In Germany for example, the government grants firms subsidies in the form of fund transfers, loans at below-market rates, preferential tax treatment, in exchange for placing low-cost rental units on the market for middle and lower-middle-income families. In reality, these prerogatives seek to lower supply costs rather than improve the ability of families to pay.
On the other hand, providing subsidies to families contributes to efficiency, since it allows for better choice of homes according to needs and encourages competition around available housing. If there were no possibility of this demand subsidy, providers would have no incentive to improve the conditions of units to attract "their customers".
Increasing Demand for Houses in Mexico
Mexico needs to invest nearly 4% of its gross domestic product annually to build 800,000 housing units a year over the coming two decades to keep up with demand. That comes out to 3.87% of the (country's) GDP.
Demand for houses in Mexico is rising while the number of people living together is shrinking. In 1990, there were five people per home in Mexico. By 2020, there were only 3.6 per home.
A number of homes in Mexico will also have to be replaced in coming years. Around 57% of homes were built by their owners, according to Mexico's national statistics agency, and many do not meet building codes.
Well-funded, La Haus is investing in dignosis because it knows that there is a huge housing demand in Spanish-Speaking Latin America, not only Mexico.
La Haus' recently rounds:
- Series B extension - USD 100 million led by Acrew Capital and Renegade Partners, debt funding
- Series B - USD 35 million Series B round led by Greenspring Associates
- Series A - USD 10 million led by Kaszek Ventures, after previously raising $6 million from NFX.
