DomoGeo: An Income-Generating Housing Ecosystem

Published: Tuesday, April 1st, 2014 by Hasan Alemdar

The numbers are staggering. Worldwide, 1.6 billion people live in substandard housing and 100 million are homeless.1 In India and Bangladesh alone, 108 million households are constructed from temporary materials, with an additional housing shortage of 32 million projected to double by 2030.2

Yet market research conducted by the Equality + Opportunity Foundation (E+O), the non-profit partner of DomoGeo, among peri-urban households in South and Southeast Asia produced a big surprise: families living in unstable, unsanitary structures did not prioritize housing on their household expenditures.

First priority? Income generation – anything to help the family make more money. The next few rungs on the priority ladder varied by geography, but always included health, education, mobile phones and satellite TVs. Housing regularly languished lower on the list.

Prototype DomoGeo House deployed in Bangalore

For DomoGeo to fulfill its social mission to improve housing and build assets for peri-urban families, we would need to develop a housing product that could actually generate income for a family. It also had to be affordable, quality, climate-resilient and eco-friendly.

The DomoGeo Solution: Housing That Works and Earns

DomoGeo is currently in the rollout phase in periurban India and Bangladesh offering mix-use houses and extensions in partnership with MFIs and housing finance companies. DomoGeo projects that these structures can pay for themselves in a short period of time. Families initially earning $7/day can use the structure to run a home-based business, pay off their loan in around 2 years, and double their disposable income in less than five years.

  • Modularity, Flexibility + Ease of Construction. Modular structures can be incrementally built and used as extensions to existing buildings, mix-use and commercial spaces that generate income, dormitories and work-force housing and roof-top terraces in metro areas.
  • Affordability. The construction cost of a DomoGeo house is 20%+ cheaper than traditional methods, with building time reduced by 80%. Because the housing designs support incremental build and home-based microenterprises, the investment can pay for itself as the household earns.
  • Quality. The DomoGeo house is made of durable, sustainable, modular components of engineered composites that adhere to safe building standards. The structures are fire retardant – a key benefit in slums, where fires are an ongoing threat – and can withstand winds of 127mph and earthquakes of 8.5.
  • Sustainability. Unlike traditional cement and brick, DomoGeo’s construction technology uses minimal water, leverages renewable resources and preserves fertile earth. The houses are lighter for transportation and create a significantly lower carbon footprint throughout the supply chain.
  • Public Health. With good ventilation built into the design, DomoGeo houses promote improved air quality. Houses include rainwater catchment and filtration, as well as mosquito netting.
  • Integrated Financing. Partner housing finance companies and MFIs provide 1-3 year loans for DomoGeo homebuyers.
Lessons Learned

Just as our market research revealed important insights about our target market’s spending priorities, we learned other key lessons from the field that have influenced our business model:

The challenge of peri-urban markets. As millions migrate from rural areas in search of employment, they often find urban zones saturated and head for peri-urban areas, flooding under-regulated areas with low-quality, self-built structures. These homes may be unstable, unhygienic, poorly ventilated and unsuitable for home-based work.

Because these peri-urban residents have informal income and land tenure, their access to traditional housing finance is limited. These households’ only option is to incrementally self-build their homes. As a consequence, scarce resources are spent on maintaining substandard buildings and diverted away from food, medicine and education. In fact, the United Nations estimates that “life- and health-threatening homes” in South Asia cost an estimated $50 billion annually in preventable disease and lost productivity.

An ecosystem in need. Formal real estate development so far has failed to fill the needs of these communities. The housing need in peri-urban areas is just the beginning of the story. Microfinance institutions have been challenged by housing. Product development can be costly and difficult to fund, requiring new staff skills and oversight of home improvements. People in these communities also need jobs and training, and small construction jobs are often performed by locals, whom a socially responsive housing business should not displace.

A hybrid structure does more than build structures. To meet the needs of these segments, a hybrid structure allows non-profit E+O to deploy for-profit DomoGeo with exclusive license of its integrated business model, including product quality, operational standards and know-how. DomoGeo will operationalize and scale the initiative first in India and Bangladesh, then globally. Licensing fees generated by DomoGeo enable E+O to maximize impact through continuing R&D, skills and training workshops for housing clients, rigorous impact assessments, housing support services and incubation of other social ventures.

Partnerships advance the mission. E+O has cultivated an array of respected local, regional and international partners with expertise in international development, architecture and affordable housing, product development, sustainable construction, manufacturing and design optimization, financial services and inclusive business. The organization’s cross-sector partnerships include prominent organizations like Arup, Architecture for Humanity and Cisco who are supporting project design, implementation, monitoring and evaluation. Microfinance partners – ISFC, BURO Bangladesh and Coast – have combined borrowers of 1.5 million, 15% (225,000) of whom are pre-qualified for an E+O house. The Stromme Foundation is funding E+O’s microfinance partners in Bangladesh, while Unitus Capital and Intellecap are supporting the organization’s capital-raising.

Responsive and responsible business practices. DomoGeo is working to show that business can respond directly to social and environmental challenges throughout its value chain. Homebuyers acquire an income-generating asset that improves productivity and minimizes their families’ vulnerability, while providing safer, cheaper, faster opportunities for home expansion.

Financing partners like housing finance companies and MFIs can increase revenues and their customer base through DomoGeo’s unique approach to housing finance. Unlike many complementary business lines, this one requires limited technical assistance and should not substantially raise lenders’ operational expenses. Smaller loan amounts control lending risk, reduce client indebtedness and eliminate the usual asset/liability mismatch of housing businesses.

DomoGeo also enables institutional clients to build safe, healthy workplaces, workforce accommodations or employee housing with a speedy construction process. This results in improved worker satisfaction and productivity, and brand recognition as a socially responsible organization. In addition, the timelines and capital requirements are a fraction of a traditional housing development.

Communities also become beneficiaries because local carpenters, contractors and builders are hired to deliver, install and maintain DomoGeo houses, and there is a rural buyback program for raw materials for engineered composite boards. The entire value chain aims to provide year-round employment to people in their local communities.

Finally, DomoGeo aims to illustrate to social impact investors that it is definitively possible to receive attractive returns coupled with deep social impact through high volume sales in a scalable venture.

DomoGeo is excited to share more at WUF7 in Medellin, Colombia. To connect with the company at or before the event, click here.

Hasan Alemdar is the Founder and CEO of DomoGeo. This article was co-written with AmandaBower, Chief of Staff, DomoGeo.

Disclosure: The Equality and Opportunity Foundation has an affiliation with Lenora Suki, founder of Smart Cities Advisors and Developing Smart Cities, through a past compensated consultancy relationship. At the time of this writing, Lenora Suki remains an unpaid advisor to E&O and DomoGeo.