Social Business + Design Sense: Elemental’s Halfway Solution for Social Housing

Published: Sunday, July 15th, 2012 by Lenora

Photo credit: Elemental

Founded in 1994, Chile’s Elemental must be one of the world’s most celebrated and recognized design-driven social enterprises in affordable and social housing with prizes including a Holcim Award for Sustainable Construction, a Silver Lion award at the Venice Bienniale to founder Alejandro Aravena, among other recognition to the 12-year old firm.

Elemental’s disruptive response to the low-income housing challenge in Chile – starting from the first Quinta Monroy project’s amazingly economical $7,500 unit in 2004 – has taken the company well beyond Chile’s borders to Mexico, Brazil and elsewhere. As a for-profit social business/”do tank” under the direction of architect Alejandro Aravena, the organization has proven that modern yet flexible structures can give lower income households a customizable home that matches their priorities but also the potential to build and grow as their finances allow.

While the design elements of Elemental’s housing concept have been lauded to the heavens, few design-driven housing enterprises are understood as social businesses. With that spirit, we explore the exceptional social business insights from Elemental’s thoughtful approach.

To be clear on the credibility of Elemental’s business concept, the value of the houses in many projects more than doubled in value over five years. For most lower income families, that could mean collateral for credit, potential to earn income from rent, a place from which to run a home-based business and a residence more conveniently located to jobs, in other words, a model that delivers substantive economic impact for its clients. The model may also improve the creditworthiness of corresponding home improvement loans.

Building half a house? That’s the crux of Elemental’s concept. Every unit is built with expansion potential – potentially up to 100% – so that the household can save money and build it out according to their capacity and needs the way families traditionally build their homes. Elemental ensures that the most critical, technically complex half of the house is built first and focuses on the stability and security of the structural elements.

Easing the land conundrum. The high cost of land is often the main stumbling block to housing lower income families within cities rather than at the edges of the city. Even with government land grants, the price and scarcity of well-located land essentially requires higher density and more efficient use than building single family homes for lower income groups offers. The genius of Elemental’s “empty” half of the housing design allows the household to “retain” land allocation for future expansion even in the context of multifamily housing.

Designing an asset-building strategy not just a shelter solution. Lower construction costs means a lower price point and higher probability that the post-completion valuation appreciates rather than depreciating. Likewise, focusing on structural elements rather than finishes, these households benefit from the appreciation of well-located land and the value of housing improvements, which they execute at a fraction of the government’s cost.

Engaging communities directly with tools for dialogue and neighborhood organization. Elemental’s commitment to these communities’ long-term viability led them to tackle what developers generally fail to do, i.e. work directly with low income households on project design. Community workshops yield household preferences to inform the design concept and project economics. Beyond the project execution, workshops aimed to instill values for neighborhood maintenance and community living, as well as outline the conditions for compliance with regulations on building materials and aesthetics for expansion. Elemental’s projects successfully put residents’ compliance to the test, proving that these projects can build self-governance capacity.

Deploying technology for scale and impact. Prefabrication drives the profitability of Elemental’s concept. By making the structure rather than the finishes the priority, the model dramatically speeds up execution. Construction costs are lowered and social dislocation minimized, especially when existing communities are rehoused on site. Projects can be scaled up faster, and the prefabricated structure makes for safer and more uniform construction standards.

Selling empowerment. Housing is one of the most important investments in any household’s evolution – even more so for lower income households. As these households have scarce capital, high vulnerability to major financial setbacks, and, understandably, a high aversion to risk, a housing solution that gives these families the capacity self-determine is a rare power.

Find more on Elemental’s innovations in social housing on DSC

Working with innovation partners across sectors. Alejandro Aravena’s vision of a design and engineering firm that would respond to pressing social needs in cities was ultimately realized through a partnership with oil company Copec and the university Pontifica Universidad Católica de Chile. Through this initial collaboration, Elemental was able to approach social housing as a multi-disciplinary challenge rather than just a design or engineering problem. Without those partners, Elemental may not have had the financial wherewithal to develop and test its social design concept, a common stumbling block among architecture firms with ideas aimed at lower income groups.

Villa Verde project in Constitucion, Chile

Cementing the firm’s vision for social housing: disaster reconstruction. Elemental’s close collaboration with communities in its projects led to the Chilean government inviting the firm to join the consortium of architecture, engineering and construction companies rebuilding the town of Constitucion after the devastating 2010 earthquake. The firm’s leadership in the design of the Villa Verde housing project has encouraged residents to create committees, participate in ideation and design and also plan for build-out, maintenance and management.

With over a decade of innovation in social housing, Elemental did an additional unprecedented service to the development of participatory design for social housing with the publication of the book Elemental: Incremental Housing and Participatory Design Manual by Alejandro Aravena and Andres Iacobelli in 2012. The world of urban social enterprise needs this perspective that housing for the poor should be managed as an investment for both the city and the residents, designed to create financial and social value and be placed within the context of the city and economic opportunity for its inhabitants. The vision is a rare example – one that entrepreneurs and investors would do well to follow.