On a 330-hectare plot of land on the northeastern coast of Brazil, real estate tech company Planet Smart City is redefining "smart city" through the development of a connected and low-cost community, Laguna.
"Laguna is proof that the global housing crisis can be successfully addressed," the company's website reads. By time of its completion in 2022, the community will house approximately 25,000 people who formerly did not have access to housing that was both affordable and strategically designed.
Planet Smart City boasts four "pillars" at the core of its development work: planning and architecture, digital technology, social programs and environmental solutions. The company says smart cities must be inclusive of all, and must address hyperlocalized needs, not just the standardized needs of highly developed countries.
Yet, what do the buzzwords "smart" and "affordable" really mean for global communities living at or below the poverty line? Smart Cities Dive caught up with Alan Marcus, chief digital strategy officer, and Janaína Campoy, head of corporate communications, at the recent Smart City Expo World Congress in Barcelona, Spain, to discuss Planet Smart City's mission to bring affordable and connected housing options to communities worldwide.
The following has been edited for clarity and brevity.
SMART CITIES DIVE: How do you define smart and affordable homes?
ALAN MARCUS: Let's do the affordable first: It's whatever the government tells us. Brazil is very clear that affordable housing has to be in a certain price range. That's important because people who want to buy affordable housing have to qualify for the subsidies. And if your home isn't qualified, the subsidies don't apply.
In the U.S., we have the Federal Housing Authority (FHA), and they qualify affordable housing up to a certain price because you get an FHA loan, which means you only need 3% down and government backs you in terms of your qualification for mortgage — so you get a preferred rate as opposed to a market rate. But the only way that's going to happen is the house has to be under [the cost limit for low-income]. So the government defines affordable. For us, that's all it is. India is a different price, different scheme. US, different scheme. It's really about where the government says, "Here's where I want to help you own a home."
So, how would you define smart?
MARCUS: Smart is a range. It's fluid. Smart is not a one definition, but we think smart is an evolution, it's a journey. Smart starts with efficiency and building efficiency into the community. For us, smart is an affordable house that is of quality, that's going to last. That's Smart 1.0.
Smart starts with quality at the right price ... The cost for a higher quality process is the same as low-quality process. Because labor is labor ... Low-income housing or any housing has a particular build cost. So I'm going to hire construction workers and I'm going to teach them how to do a better process and they're going to get paid a good job and they're going to be able to continue with their job. That process, that's our first part of smart.
Next, putting in infrastructure that lasts. For us: road beds, walk paths. We're putting in much higher quality materials because we build them ourselves. We have a factory that actually produces our own brick and a lot of our own building materials right on site. We have local people that are operating the machines, that lowers the cost. We're producing our own, that lowers the cost. But the quality is very high and it lasts. Lasting quality also means lower maintenance, [which] is actually cheaper for us.
We optimize through the whole process. The infrastructure gets laid out. Even a lot that has no house is fully capable of connecting to the smart infrastructure ... That's the second part of smart.
Which then allows us to do some really interesting things, allows us to turn on smart services when the community is ready. We have a community manager from the first home being built — and the bigger the community, the more community managers we have — that starts to meet the people, talks to them, engages with them, finds out what their concerns are, their needs, their aspirations, what can we do with this community? We start to teach them about governance ... And we start to see what services need to be done so we can start to turn services on as people require. This is another layer of smart.
It's not about what's the latest sensor, it's not about smart parking. My residents don't care because if I build houses with a driveway, I don't need smart parking. For us, anything that increases buying power and lowers price is a game changer for low-income ... We see hyperlocalization has the key to affecting quality of life.
How are you promoting this to the local community? What types of people are you looking to apply?
JANAÍNA CAMPOY: We've got a few types of consumers. We've got people buying houses, teachers, people working at banks. We're near a port, so there's a lot of workers there. So they've got jobs and were renting in the local market. First-time buyers, basically. We also have people buying land plots to build later. And then we've got people from a widespread geography ... They are very excited about what it means to be in a smart city so they want to engage.
Has there been any opposition to the development?
MARCUS: In fact, the opposite.
CAMPOY: Yeah, we keep receiving on social media, "When are you coming here?" There's a lot of demand.
MARCUS: There's a gap in the number of people who need a house like this and are qualified to buy, and the number of houses available in the whole country. The gap is so large that even if you build 400,000 homes a year, the gap will continue to grow. And right now, that's about what the build rate is across the country.
So, what is the standard price?
MARCUS: About $25,000-$30,000 ... [For about] 550-600 or so square meters. And there's a couple of configurations. There's one there's actually two floors that obviously would be the most expensive and then the smallest one that's just two bedroom would be on the lower price. They're small.
CAMPOY: But the perception of space changes completely because you've got so much communal space. You don't feel [crowded] because you got freedom.
Why did you choose Brazil and this specific area where you've purchased the land?
CAMPOY: Our founder, he's been in real estate for 25 years, and he found this land in Brazil very close to a port called Pecem, and that is a very growing area. Economically, the area is expanding.
So there's the port, but at the same time you've got Fortaleza, which is the capital 55 Kilometers away, which is not that far. Also got beaches 20 kilometers away. So location-wise it was very good business.
Some U.S. cities are really missing the mark in trying to address housing crises, and as we've seen, the real estate industry is slow to digitize. What is the solution to building more affordable housing and making sure it's smart?
MARCUS: Retrofitting [is one]. Building owners are looking for a way to maximize the return on buildings. They're typically already designated in low-income areas or are getting special grants to continue to support what we've built into low-income spaces ... But now that they're starting to see what we're doing, they're thinking that maybe they could create higher value. So as a sort of advisory service, a consulting service if you will, we're now working with a lot of those companies ... We can still work a lot with space optimization, which is part of digitization.
When we talk about smart, the vision isn't about the finest in technology, the vision is about a lifestyle for low-income people to not feel like they're the marginalized class. They're being pushed into these chicken box places ... with no infrastructure. A lot of these places don't even have electricity and they feel even more marginalized, more isolated and then inflation comes and the rich use their power to negotiate better pricing, the poor end up with retailers that can't stock enough goods to charge a lower price. And it just gets worse and worse. So we want to break that barrier. That's it.