Friday, September 26, 2008

Anni’s housing policy looks more realistic

Candidate Nasheed's housing policy aims to foster home ownership. To achieve this he promises easy access to building materials, soft loans and an affordable real estate market. Unlike others in the fray, Anni has resisted the temptation to make populist promises like building Male-like cities and 8000 flats, which on deeper analysis appear to be little more than castles in the air. Further, these dream projects have the potential of turning nightmare, as explained below. Thus Anni's approach to housing appears to be more down to earth and sustainable.

It goes without saying that policies must be based on the situation on the ground. For example, what is the real demand for flats in the Maldives? Based on the number of people who applied for Hulhumale flats in 2006 and the Census (2006) data on the number of people living in rented places, the demand for flats has been estimated to be about 9000. (Details given in Appendix 1 below).

How many flats are currently under construction in Male? Based on Municipality data on the number and size of buildings authorized for construction in Male within the last 5 years, the equivalent of about 14,000 flats are probably under construction. (Details given in appendix 2). This figure itself is higher than the estimated demand of 9000. If one adds the promised 6000 - 8000 flats, then the supply would appear to be double the demand. What effect will this have on the real estate market?

As given in Appendix 2, more than 3000 buildings are currently authorized for construction in Male alone. Most of the owners of these buildings would have taken commercial loans to finance them. They would depend on a certain minimum rent to be able to repay the loans. If 6000 – 8000 flats are artificially injected into the market, will the rents remain at sustainable levels to repay the loans?

In reviewing campaign promises one must also consider their economic feasibility, keeping in mind that the total government revenue per year is expected to be about $800 million. Against this, the proposal to build 7000 to 8000 flats will cost about $600 million at current rates. Developing an additional Hulhumale like city is expected to cost about $ 500 million.

In summary, the housing policies of presidential candidates take two different approaches. One is to inject thousands of flats into the market within just 5 years. Theoretically this could be a quick fix solution. But is it economically feasible? What effect will it have on individual enterprise and homeownership? Further, this approach is merely old wine in a new bottle. What makes one think it will work this time?

The alternative approach favored by Anni is to help individuals build their own homes. This approach will be slower, but probably more realistic and sustainable.

Appendix 1:
Demand for flats

The demand for flats has not been researched formally. But we can get a fairly good idea from the number of people who applied for plots of land in Hulhumale in 2006. These plots were open to all citizens anywhere in the Maldives above 21 years who did not have plots in their names. Thus the number of people who applied (11,889) can be taken as the number of people who wished to own a house. The actual demand may be considerably lower because all those who wish to have a house may not be able to afford even subsidized rents. Take the case of those who bought row houses in Hulhumale. As many as 24% of those who got the row houses gave them up because they could not afford the rent. Taking this into consideration, perhaps only about 9000 (out of the 11,889) can be considered to be the real demand for flats/homes. This figure is also in harmony with the Census 2006 figures, which show that only 6335 households live in rented accommodation (out of the total 46,000 households in the Maldives).

Appendix 2:
Estimate of flats currently under construction in Male

The promised 7000 to 8000 flats don't come in a vacuum. There is already a brisk real estate market in Male. According to Municipality data, during the last 5 years they authorized the construction of 3020 buildings in Male with a total residential area of 938,962 square meters. This is the equivalent of 14,445 flats (of size 65 sq m). Of these 928 buildings were completed during the 5-year period adding 129,336 square meters of residential space to Male. This is the equivalent of 1990 flats.

[Note: Data used in this article are sourced from (1) Party manifestos, (2) Statistical Yearbook 2007 and (3) Press briefings of Hulhumale Development Corporation in 2006.]

Acknowledgment: The aerial photo of Male is from the blog Maldives in Still Mode (


Anonymous said...

A good article at a very opportune time. Campaign promises must be analysed carefully before they are made public. I am sure many of these so called presidential candidates do not fully understand the catastrophic end result of their housing policies.

Anonymous said...

Good post.

By the way, i think you should do a lead role in MDP. you got politics in your blood & boens man. hehe

Anonymous said...

We cannot be materialistic only. We have to be spiritualistic also. Then only we may be saved from eternal doom when we die. What about Anni's religious policies.

Anonymous said...

Anei dhivehiraajje seems more like castles in the air.

Policies can come, but does Anni have such capability to implement and work on it? I doubt it! And many doubt it! But Maumoon has been there for 30 years despite who favoured him and who did not favour him.Maldivians have gone through a lot and they keep paying the price of this in one way or the other of the debris of the past 3o years.

Likewise even of Anni gets elected that in now way means he is right.That means as usual Maldivians are divided and were unable to decide.

Noor said...

Dear Waheed,
With respect for you and the great posts on your blog, I would like to say that you have grossly misunderstood the housing fiasco in the Maldives. First of all, I do not agree with your estimate for the demands for flat as 9000 flats for 5 years. The number of applications for land and flats in Hulhumale' cannot be taken as an example for this case. First of all we should know the rules and restrictions put on the eligibility criteria for land and flats in Hulhumale'. To apply for flats, you have to be a registered as Male' citizen. Other common criterias for flats and land include, being married and having kids. So these criterias prevent many people, young and old, from applying to Hulhumale' land and flats. The huge downpayment for housing in Hulhumale' is also a big dicouragement. How many people in Maldives who can afford to pay Mrf. 80,000 - Mrf. 135,000 for the downpayment? How many newly wed couples can afford this or are eligible? So my estimate is that less than 50% of people who wants housing are actually applying for it. So it is 18000 refering to your estimates and which might be the reason for the skyrocketting rents in Male'.

It is sad that you are arguing to keep the Male' rents as high as it is now. I tell you, it is shocking to see the rents of a 3rd world country capital to go as high as cities like New York, London and Singapore. This is unacceptable. This is very reason for the common Maldivians belife that the Land lords of Male' are suckin the blood of rajjetherey people. The next president of the Maldives should be the president for all the citizens of the country, not for only Male' people. It is critical that the rent are brought down to level the huge income gap in the country. I also would like to highlight that other presidential candidates, like Dr. Hassan Saeed has also promised to reduce the cost of building materials and provide loans for housing in addition to 5000 to 8000 flats. It also his policy to develop the housing sector in a economically feasible way for real estate business. So please dont think that it is only Anni who has a realistic policy on housing. My opinion is that it is Anni's policy is to continue with the current unfairness where Male' land lords take the whole salaries of rajjetherey families for rent and live like kings.

You say that the governments revenue is $800 million per year. If so, it would be $3200 million for 5 years and withing this time period we would be spending $600 (19% of the 5 year budget) for housing. Is this an unreasonable amount? To spend 20% of the governments bugjet on housing? what about the people displace by the stunami? are we forgetting them? And also, to build Hulhumale' like cities, we need not throw our money into the sea. There are island or chain of islands which are twice or thrice bigger than Hulhumale'. If this 20% is invested in these islands, we would see cities better than Hulhumale' much sooner than we expect.

This is why I totally disagree with you. The most important thing that we have forgotten is that Maldives is 99% sea and 1% land. If we keep giving land to individuals like Anni is suggesting, we would run out of land within less than 10 years. If so, what would happen to our futue generations? Building flats is the one and only solution for small countries like Maldives and Singapore. Why arent we learning from the Singaporeans? Why do we have to live in divided societies? This is our great weakness. Do we want to stay backward for another 10 or 30 years?

Anonymous said...

We are talking about leaders backed by political parties and not individuals backed by a handful of cronies.

Under our new administrative structure, Political leaders make the policies and the civil service helps to implement them. Unlike Maumoon, Hassan and Gasim, Anni does not claim to be a jack of all trade. Anni is a driving force. He helps people to make things happen.

Anonymous said...

MDP which so far claims to be a huge party keeps on dividing and dividing.And we have not forgotten how its first election of a president went.We still remember it.
Meaning we have no trust in Anni and his MDP Ithihaadh or whatever.

Anonymous said...

Individual backed by handful of cronies, This refers more to Anni.

Hassan Saeed is the kind of leader Maldives is in need of and Shaheedh to go along with H SAeed makes it a great team.DREAM TEAM

Anonymous said...

I dont agree anything MDP says any more. They are playing dirty politics to get elected. they will say anything to get elected. Anni first country second to them.

MDP does not have intellectual capacity to do what they promise.its leadership has no guts to respect technocrats. Anni himself believes he knows everything under the sun, from molecular collision of atoms to the history of entire globe.

Dr.Waheed, I thought you are at least a sensible person to analyze these gimmicks these selfish politicians like Anni make before you endorse them as good realistic policies

Anonymous said...

Last anony. totall agree with you.

For Annis supporters Anni comes first at any cost.We dont want this kind of leaderships like dhaadhaas.

Anonymous said...

I really agree with Noor's opinion. Dr. Waheed may not understood housing problem faced the whole country fully. you only focused on Male the rest you forgot. Anni and some other parties were taken lot of advantages from Dr. Hassan's manifesto because he was first one announced manifesto publicly. if you care fully take heed Annis speech. he tries rephrase what Hassan says in his manifesto. the most obvious thing is "aneh raajje" he rephrased the concept of New Maldives. Dr. Waheed whether you agree or not Anni is good for an activist not head of state.

Anonymous said...

Anni may be number one activist in the country. But does it make him a good leader or a truthful person. Maldivians beware of people like Anni. How many lies has he made so far. Can we believe his promises. I cannot buy his vows. I have nothing personal against Anni but this is my analysis of the person who is responsible for many good changes we see today.

Anonymous said...

Please have a look at this video.

This is Anni's drug policy. You will be shocked. I tell you.

Anonymous said...

anony Very well said.He has done a lot as an activist which is in his nature.An activists nature and a leaders nature will never be the same.

And look at those who came along with Ithihaadh.Did any one watch VTV 2 days back with 2 representatives from MDP ithihaadh or whatver.It was a total joke.And the rumor is Gasim cannot talk.SO can Anni talk?

IF we dont want Burumaa there is still Hassan Saeed which will be a better choice.Cause he is in his senses.

Anonymous said...

In my opinion, Anni is not good for anything, he always bring these failed ideas and bad policies.

When we think of his experience, he never held any executive office, never manage any good business.

When we look at his political career, look at MDP then during 2005 and now. MDP leadership is not intact any more party members and activists are in different camps.

If we elect Anni, he will ruin the whole country the way things are in his CV if we look at chronology of his career.

He was born to a rich family and married to a daughter of a tycoon, so he don't have to think of what middle class or common man has to fight to meet the challenges of rising cost of living in Male'. The very reason he never held any constant job in nay form.

So my opinion he is not qualified to be commander in chief of a country or head of state.

Anonymous said...

mdp AND sAEED should join Ibra and leave all deals behind if they are working to estaBLISH A PROPER GOVERNMENT FOR US.let us see how selfish the activist is.

Anonymous said...

Most of these comments has no relevance to the article. Why prices in Male' are high is due to unavailability of loans at low interest rates to be paid within 3 - 6 years. Recently I took a loan of 3.5m Rufiyaa to build my house from a commercial bank in Male' at 12 percent interest and to be paid in 6 years. I have to pay the bank 80,000 Rufiyaa each month for six years! To pay this loan, I have to get 20,000 Ruiyaa from each of the four flats (3 Bedrooms), each month. Selfish??? Investments are made based on demands that exist at the time of the investment. What would happen to these investments if the demand scenarios suddenly change? Why not the Government arrange loan facilities at low interest rates to be paid over a longer term? say, for 12 years. The rents could be lowered to 10,000 Rufiyaa. If loans are available for 18 years, rents could be lowered to 5000 a month.

Think!!! before you accuse others!

Anonymous said...

m suprised. could u pls write an article abt maldivian who talk always others r not religous, they say maumoon, anni, waheed,. they r not religeous. but u know even those big mouths who say others r not religeous , also not religouse.
madhen heehee halaaku.
religous is between da person and Allah.

Noor said...

Loan interest has been at 12% for quite a long time. but why are the rents soaring after 2004? main cause is the tsunami. after the big wave hit, many Maldivians realized that it was not safe to live in small isolated islands. they started to move to male'. this tremendous increase in demand for housing in male' is causing the skyrocketing rents. the other cause is the in flock of foreign workers. mostly the booming construction sector after the tsunami has increased the number of expatriate workers drastically. these people are also putting pressure on male' housing. without other alternative settlement places for maldivians, the pressure would keep on increasing on male' making life difficult for everybody. Of course there would people who would take the advantage of this situation and make a huge profit out of this by taking commercial loans, even at high interest rates, and building houses in male'.

Anni's policies doesn't solve this dire situation. I think Dr.Hassan has a better idea on how to solve this.

Anonymous said...

you see, anni promised to foster housing ownership to evryone. that is somethin impossible for this country as this is a small one.