IFC Client VINTE’s Low-Income Homes Help Reduce Carbon Footprint – Offering Holistic Approach to Climate Change
Washington, D.C., February 17, 2011—Leading Mexican construction company VINTE (Viviendas Integrales)– which specializes in sustainable and eco-friendly housing for lower-income families – enables its home buyers to measure and monitor electricity, gas, and water consumption, thereby enabling them to save money and protect the environment. By optimizing design and energy consumption, VINTE’s low- and middle-income home buyers are helping to reduce their carbon footprint.
In 2008, IFC committed $22.5 million to this rising developer, including $12.5 million debt and $10 million equity. VINTE has sold more than 8,500 homes in the last six years. Prices start at $22,000, making them attractive to young working adults – many of whom are first-time home buyers who grew up in Mexico City’s informal housing settlements with marginal access to clean water, electricity, sanitation, roads, schools, and parks. For them, VINTE’s clean, affordable, and well-planned urban developments are “a dream come true!”
Many of VINTE’s customers have annual incomes between $9,000 and $20,000. More than half of them prefer the least expensive home models and have been able to secure 30-year mortgages through Mexican Government-sponsored, World Bank-supported housing programs.
A typical VINTE home is about 600 square feet and contains a living room, dining room, kitchen, laundry patio, two bedrooms, and a bathroom. Buyers are usually salaried workers who need inexpensive housing and utilities: they are school teachers, bus drivers, factory, and office workers. VINTE homes are contributing to sustainable urban infrastructure and surrounding community development; these developments were previously built by local and federal authorities but were neglected due to a lack of resources.
VINTE built its pilot sites in Playa del Carmen, Quintana Roo state; it also has a presence in Tecámac, México state; Tula and Pachuca in Hidalgo; and plans to start building in Querétaro in 2012.
VINTE homes have Internet service through wireless broadband delivery; and meters to measure electricity, gas, and water consumption. Each home is designed to reduce gas bills by 75 percent and is fitted with a special wall meter that allows residents to monitor water and energy use. In addition, these homes will be able to generate their own electricity through solar cells on the roofs. The architectural design benefits from the Near Zero Energy concept which follows bioclimatic criteria, technical efficiency, and telemetry systems – facilitating savings up to 90 percent of the total cost of the average consumption of energy in the region. Near zero energy homes reduce environmental impacts by producing almost as much renewable energy as they consume in utilities.
With 20 million people in greater Mexico City alone, VINTE’s market is large. The country’s Green Mortgage program – which won the International Star of Energy Efficiency Award from the Alliance to Save Energy, a business-led global NGO – provides incentives to home buyers to purchase energy-efficient homes.
Founded in 2004, VINTE was the creator of the innovative G7 Habitat or "Housing of the Seventh Generation" which encourages a more efficient use of water, gas, and light. The company has won six national housing awards – the most recent one for building environmentally friendly communities. It was also Mexico’s first developer to include computers as part of home fixtures and fittings as well as low-cost Internet access, digital cameras, school and commerce Internet linkages, and software for property administration.
Due to its after-sales services and sustainable designs, each of VINTE’s home models has increased its value over time, reaching up to 15 percent annually and resulting in capital gains as well as increased interest from government and private financial institutions to provide mortgages. The company is continuing to invest in research and development, and cutting-edge technologies. In 2009, VINTE launched a new low-income home costing $25,000; it is increasing the construction of these homes and will continue to innovate within the $25-35,000 homes to reduce their cost.
Mexico’s housing market is among the largest in Latin America. At the recent United Nations Climate Change Conference in Cancún, the country’s leading housing developers announced the Near Zero Energy Housing pilot projects. These projects are aligned with the National Housing Commission’s strategy to promote the construction of sustainable housing developments and use of energy-saving technologies – thereby helping to reduce CO2 emissions and generate long-term savings for residents.
Based on population growth and lack of affordable housing, there continues to be a strong
demand for low- to mid-income homes in Mexico. Easier access to home mortgages, construction financing, builders, and suppliers have strengthened the housing market which has had a multiplier effect on the country’s economy with seven jobs created for each new home construction. Developers have increased their investment in infrastructure and services from 1 percent in 1995 to 11 percent after 2005. From 2000 to 2005, access to essential services such as water, sewage, electricity, and concrete floors (as opposed to dirt floors) has increased to 90 percent of the total homes in Mexico.
Innovative and Unique Business Model
VINTE’s business model is successful because the company targets consumers who are planning to live in the housing development – not those who want to buy a home to rent out. Most importantly, home prices have remained affordable to working families.
According to VINTE’s CFO,Domingo Valdes, “In tough financial times when more than half of Mexican home builders went out of business, VINTE surpassed the competition and continued to build low-income housing. This happened because VINTE applies two key concepts: integral and sustainable urban design; and producing affordable, eco-friendly homes. We offer a holistic approach to solving social and climate change issues.”
“IFC’s housing strategy – in its newly-reorganized services sectors – is to increase access to affordable housing which is a key element of expanding essential infrastructure,” noted IFC Manager, Consumer and Social Services, Elena Sterlin.“Housing creates value, equity, and wealth; it helps raise living standards; and, over time, creates and supports a stable middle class; after all, what is more developmental than providing shelter?” Ms. Sterlin added that IFC is proud to be associated with a company whose “green buildings are excellent examples of using innovative technology to produce sustainable energy-efficient homes.” Consumer and Social Services is part of IFC’s new Manufacturing, Agribusiness, and Services Department.
In July 2010, IFC's Board approved a second transaction to help VINTE issue long-term bonds in the domestic Mexican capital markets. The project consists of a three-year debt issuance of MXN 300 million ($23.9 million) by VINTE and is supported by IFC in the form of a partial credit guarantee that will raise the credit rating of the issuance. This is VINTE's first debt issuance with institutional investors and will support the company's growth strategy; it will also help VINTE build more quality and affordable entry-level housing benefiting a large number of its target clientele: low- to mid-income families.
Elizabeth Price Sr. Communications Officer, IFC Consumer and Social Services Manufacturing, Agribusiness, and Services Department Phone: 202-458-0387 Email: email@example.com