African Stock Exchanges Association Conference 29 November 2016 Kigali Speech
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This document discusses creating a "social real estate investment trust" (S-REIT) and stock exchange to provide housing and financing for slum communities. It describes a pilot housing project that constructed 675 apartments and vacated 4000 people from slum sites, generating financial returns that exceeded the initial investment. It argues that a "living stock exchange" could transform communities by unlocking the value in land and addressing the urgent housing needs of the most marginalized groups. The goal is to make capital markets work for those communities and customers that need it most.
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African Stock Exchanges Association Conference 29 November 2016 Kigali Speech
- 1. (c) CMM 2016 1 “I am a Stock Exchange Person, THE SLUM DWELLER IS MY CUSTOMER” The Social REIT & THE CAPITAL MARKET Dr DARIN GUNESEKERA Capital Markets for the Marginalized (CMM)
- 2. All Business has Needs The lower the scale; the more powerful the Need 2(c) CMM 2016
- 3. THE SLUM DWELLER IS MY CUSTOMER We have Obligations and Responsibilities by our Customers 3
- 4. (c) CMM 4 Global Crisis Donor Housing Loans Founder On Risk Decent Housing Shortage of Over 50% of current stock Slums Shanties Grow Faster than Economy Growth City = Rich get Richer Poor get Poorer Donors World Bank Keep People in Slums Through Onsite Upgrade
- 5. (c) CMM UNHABITAT’s Biggest Slum in the World Kenya - Nairobi - KIBERA or KIBR. It is located on a Tribal Homeland whose demarcation was not finalized by the Colonial Government Commission. Is this a Planning Issue? 5
- 7. THE INSIGHT - SEE & DO The Capital Market is not Working We Need A Stock Exchange for These Needs Start with HOMES Look at all elements of the process with the best standards agreed upon as Socially Desired Then find the Financial Solution 7
- 8. (c) CMM 2006 8 Land Cycle Process. (The Observation referred to above) First vacant or acquired land (Trust 1) 1 Occupied Estates: (Trust 2, 3 of Cycle 2) 2 3 Occupied Estates: (Trust 4..7 of Cycle 3) 4 5 6 7 Land Cycle 1 Land Cycle 2 Land Cycle 3 – projects exchanges new units for vacant possession of old units – New units must be more attractive to encourage the move Slums occupy 600+sq ft ground cover/ unit; planned units only 110 sq ft
- 9. THE REIT • trustees developer Land in -Certs out Cash in-Certs out investors Condo Sales market Primary market 9
- 10. (c) CMM 2006 10 Social Real Estate Investment Trusts - I TRUSTAuthority Social Housing Resident Land Shares Vacant Possession Shares • Start with a compact city area re-development project plan • Existing Social Housing residents approve the plan • This facilitates a Trust market deal between the landowner (Authority) and social housing residents. • The deal is shown above
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- 12. (c) CMM 2006 12 The People’s Stock Exchange
- 13. (c) CMM 2006 13 S-Reits II Trust is financed by investors and home buyers. Shares may convert to homes TRUSTInvestors Cash via Investment Banks Shares* * Includes right to ownership of a specific house / flat
- 14. (c) CMM 2006 14 S-Reits III - A stock exchange Trade via Investment Banks * Shares Investors (Authority, Individual, Institutional) On – going STOCK EXCHANGE Market: EXCHANGE EXCHANGE Regulates Information Flow
- 15. (c) CMM 2006 15 RESULT = Pilot Project I ■ 675 apartments in first time ever high rise occupation by slum/ shanty dwellers in “Streets in Sky” design voted for by them. ■ Corresponding 8 sites (4000 persons) in same neighborhood vacated ■ Land/ built space market given to regeneration. ■ (See 5-2)
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- 17. (c) CMM 2006 17 Project Results ■ FINANCE ■ Total Investment = SLRs600M ■ Outside Community Sales (Financial Return) = SLRs1700M ■ SOCIAL ■ Self sustaining 675 homes paying rates ■ Lives transformed from Shanty to Middle Class ■ Regenerated Neighborhood ■ All Children go to School
- 18. Financial Returns：Unlocking the Profit in the Land Investment: SLRs600M (USD6M) Outside Community Sales (Financial Return): SLRs1700M (USD17M) 18
- 19. (c) CMM 2006 19 Project Results ■ BEFORE AFTER
- 20. ■ video 20 The Past and Present seen by independent video production.(6 years later; long after project period; 5 years after full Condo hand over).
- 21. • The Stock Exchange STARTS by turning the searchlight on to REALITY • Example Benares • Example Cinnamon 21(c) CMM 2016 The LIVING Stock Exchange
- 22. (c) CMM 22 In Benares, India: Constructive Social Action
- 23. • The transformative POWER • Land Prices in Colombo poor areas • Even the two small cases - Money created • The Stock Exchange is a LIVING SOCIAL INSTITUTION 23(c) CMM 2016 The LIVING Stock Exchange Transforms Tomorrow
- 24. 24 • Look for • Queues • The Poorest in large numbers • The Desperate in large numbers • THEY NEED the LIVING STOCK EXCHANGE • Forget • Dead Letters, Laws, Regulations • Yesterday’s Ideas • The Stock Exchange is a LIVING SOCIAL INSTITUTION • Your Duty is to Find Your Customers from those WHO NEED THE STOCK EXCHANGE • Go There and Make them Your Customers • Join our Movement • CAPITAL MARKETS FOR THE MARGINALIZED • https://darincapitalmarkets.wordpress.com LIVE The LIVING Stock Exchange
- 25. (c) CMM 25 Kibera Elders Council’s Social Action for Financing ■ The tribe whose “homeland” is Kibera, called by UNHABITAT the worst and largest Slum in the world. (Nubians of Kenya) meet to get financial advice