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.
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).
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 (http://mashafeeg.blogspot.com/)