Takeaways for Housing Innovators: Hardware vs Software Approaches to Smart Cities

Published: Saturday, October 10th, 2015 by Lenora

arc_49_no_textThe compulsion to re-everything cities runs through the popular discussion of the world’s newly emerging and exploding cities. Re-think, re-imagine and re-shape. Rehabilitation. Regeneration. Renaissance. These loaded words often embrace conflicting visions of the end goal, the plan for getting there and who benefits.

Smart cities concepts mostly push infrastructure, basically “hardware” solutions, with limited thought to citizens and the distribution of infrastructure’s benefits. Yet, people-centered “software” approaches are now gaining ground. Smarter cities are recognizing inclusion as a guiding value and critical goal. There’s much for housing innovators to learn from this.

Cities need to be more “user-centered.” User-centered design, ubiquitous in the tech world, has arrived in cities, smart and otherwise. This blog post at Context Partners advises on collaboration, listening and embracing chaos to the benefit of all city residents, especially the marginalized and excluded.

This idea is now mainstream for urban designers, NGOs, community groups and “labs” everywhere. Urbz, a favorite, work mostly in India, advocating for deep, participatory work with communities. Check out their crowd-funded upgrades and community-built housing in Mumbai in The Homegrown Cities Project (great videos here and here).

Rethinking Smart Cities from the Ground Up, published by Nesta, the UK social innovation NGO, “combines the best of ‘top down’ city–led approaches while making the most of the growing potential of ‘bottom–up’ technologies, and above all the citizens who power them.”


Inspiring examples – from Beijing, Amsterdam, Mumbai, Paris and more – span sensors, apps, social media and open source. To what end? To inspiring visions of the connected city, where people are what’s being connected for sharing of information, rides and goods, community security, improved air quality, direct democracy, collective planning and more.

Housing innovators need to think “software” too. Housing innovators can learn from this shift. Affordable housing can now mostly be developed with a “build it and they will come” philosophy. Because of pent-up demand for low-cost, affordable and entry-level housing (pick your term), buyers throng to oversubscribed projects.

Unfortunately, infrastructure-first building for lower and moderate income segments often misses issues like quality, durability and sustainability. Mexico’s housing crisis shows how wrong this can go.

House That! Moving Beyond Conventional Housing, published by Cushman & Wakefield India, provides a quick take on addressing India’s housing deficit, now nearly 19 million units. The most important number in this report is 95%. That’s the share of the housing deficit accounted for by what are called Economically Weaker Section (EWS) (56% of the total) and Lower Income Groups (LIG) (39%).

Almost all of India’s housing deficit, like most of the world’s developing cities, will need innovative and affordable solutions for housing and community development. Report highlights point out:

  • international examples like micro-housing, co-housing and themed communities, like artist villages
  • recognition of rental housing to fill gaps that homeownership can’t
  • acknowledgement of location, services, jobs and recreational space as necessary
  • desperately needed technology-enabled housing development, including prefab, modular, and (someday soon) 3D-printed houses for cost savings and quality improvements
  • alternative materials, like bamboo, for cost savings, earthquake resistance and quick build (check out Domogeo)

Some advice here will not move the needle much. Branded residences, second homes, senior assisted living and serviced apartments, will only help those with high incomes. Likewise for making high-end units smaller without compromising rates of return. This is margin management not innovation.

“Software” for people is the missing link in housing innovation. Far-sighted affordable housing developers can build great projects that serve the homebuyer only through a combination of respect, ethics and transparency, tight focus on customer needs, recognition of reputational benefits and long-term commitment.

Amarilo in Colombia is working to embody this ethic (see our longer feature), with the Ciudad Verde project, a master developer model that brings in several builders on one master-planned site outside Bogota. In addition to small, simple apartments with premium features, local schools, green spaces and social infrastructure, Ciudad Verde also has set up an association to give residents a voice and agency in its management through the Agrupacion Social Ciudad Verde.

The ups and downs of dense community life are on display on Ciudad Verde’s Facebook pages (here and here) – voices of those who welcome peace, safety, home and good neighbors as well as complaints of community members who expect more. Other residents have found their own voice to hold developers to account for shortcomings.

In an age when residents can visibly both praise and elevate their complaints, affordable housing developers have to rethink the hardware approach for a customer-centered product. Maintaining brand and reputational capital requires more hands-on collaboration and longer time horizons. It takes more creativity, organization and social marketing than capital to improve the daily life. Apps to help residents share rides, report security issues, put in requests for service, improve waste management and improve community decision-making may be as effective in lower-income communities than cities at large because of their density.

Other people-centered elements of affordable housing. Informal, self-built housing will not fill any country’s housing deficit. Progressive developers and investors will need some of these ideas to build transformative affordable housing:

  • Mortgage and home improvement finance that meets the needs of lower income borrowers
  • Planning and codes that accommodate these newer forms of residential living, such as health and safety-related standards to accommodate shared kitchens, bathrooms and open space
  • Inclusive and progressive urban design and architecture that includes parks, community space, and bike and walking paths
  • Public-private partnerships to derisk projects, to help developers invest in new processes (as with EcoCasa), to accommodate community consultation and release public and underutilized land only for affordable housing or mixed development
  • Catalytic funding for co-housing and cooperatives to provide project equity and loan guarantees, technical assistance for market and feasibility studies and community development support
  • Support for residents’ organizations to strengthen self-governance and facilitate collective management of issues like security, collective living, waste management and sustainability
  • Partnerships with NGOs offering social services, such as job-training and search and access to government benefits
  • Impact assessments to determine how well these communities are living up to their objectives longer-term (as IHS has done)

Much more than this is necessary to ensure that the next generation of cities serves the needs of the people who drive their dynamism and competitiveness. Developing Smart Cities continues to feature the work of exceptional housing business and investment leaders making it happen. Let us know about your story here.