By 2030, over 60% of the global population will be concentrated in urban areas. The World Economic Forum envisions that future housing development should be sustainable and equitable, with prices that are not prohibitively high and located within reasonable distance from workplaces. This is expected to first occur in developing countries.

In 2015, the United States had nearly 21 million renters and 18 million property owners, spending more than 30% of their income on housing. Similarly, The Joint Center for Housing Studies of Harvard University reported that there were over 11 million homeowners and about 8 million landlords who spent more than half of their income on housing.

            Even among high-income professions, surveys have found that this group struggles to find housing close to their workplaces due to development being concentrated in city centers, resulting in exorbitant housing prices. Consequently, middle-income residents are pushed to the outer suburbs, leading to increased commuting times and costs, particularly for foreign workers, a significant demographic in America, who are often displaced from urban centers. The World Economic Forum believes that such isolated development hinders community cohesion and exacerbates economic divides, potentially leading to further issues.

Mixed-Income Community

            The concept of mixed-income communities has begun to emerge, with several cities in the United States demolishing dilapidated or unoccupied housing to develop new projects aimed at fostering mixed-income communities. This means that these communities will include housing for individuals across various income levels. This approach has been proven to elevate incomes, as lower-income residents have the opportunity to reduce commuting costs and create new social connections.

In Vienna, real estate developers collaborate with city agencies to create mixed-income housing in the form of apartments, with 50% allocated for low-income residents, where rents are controlled by government agencies to not exceed 20-25% of their income.

            Another initiative to accommodate urban population concentration is the development of Mixed-Use Complexes, which include residential, retail, and office spaces located in suburban areas to distribute job opportunities more evenly rather than concentrating them in the city.

            The motivation for initiating such projects stems not only from global trends but also from pressing factors such as skyrocketing land prices. Developing land near public transport is challenging due to competitive bidding and contracts with government entities. Additionally, land developers cannot simply purchase and hold land; they must have a development plan in place.

World Economic Forum has suggested three strategies to address the development of mixed-income communities:

  • Community development must involve equal participation from citizens and stakeholders in land allocation, focusing on sustainable living.
  • Each community should establish its own housing fund to secure necessary financing for land acquisition and development.
  • For tangible success, governments should consider long-term credit and tax incentives for communities focused on this type of development, as short-term incentives will not lead to sustainable solutions.

A significant barrier identified by the World Economic Forum is the difficulty in raising awareness that mixed-income housing development drives long-term economic growth. In New York, it has been documented that such housing developments can have positive impacts at both the household and local economic levels. Between 2011 and 2015, mixed-income housing projects created over 329,400 jobs and more than 46,800 permanent positions. If more mixed-income communities are developed, it could uplift over a million people, with results visible in the next 20-30 years. -เทอร์ร่า บีเคเค

Article by: TerraBKK Investment Tips

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