Developing scalable solutions for increasing the long-term liveability and resilience of our urban environments

We see the development of sustainable, affordable and liveable housing at scale as a critical challenge for sustaining the long-term health of our urban communities. On most metrics, we are falling short of building towards an inclusive and sustainable urban environment and the trends are heading in the wrong direction

Within the European Union, 34% of households pay over 40% of their exposable income for housing alone. This number is rising, as in the last three decades, the prices of apartments have risen three and a half times more than average household incomes. At the same time, one in six people report living in a home that is damp, dark, too cold or too warm. On the community side, numbers from the UK show that about a quarter of the population always or often feels lonely. The building sector further accounts for 39% of energy-related CO2 emissions globally and 40% of global landfill waste. These trends and figures are observed at the backdrop of urban population growth projected at 2,3 billion people between 2020 and 2050.

Our vision for housing in the major cities of Northern Europe in 2050

At Breathe, we want to contribute towards making cities sustainable, inclusive and liveable.

On sustainability, we foresee the development of more circular building approaches whereby buildings are constructed for disassembly and end of life-cycle value. New materials need to be developed and integrated into construction that avoid making landfill waste of old buildings. We foresee buildings being designed for more efficient whole life-cycle maintenance. Green energy solutions, insulation, heat pumps and solar panels will have a role to play in bringing the CO2 emissions from housing downward and on to net-zero, eventually.

Cities need to be inclusive of different income groups and demographics. Demographic changes will need to be accommodated, such as the special needs of the ageing population and younger people living in smaller units. Keeping cities inclusive also means accommodating diversity in terms of income and ethnic backgrounds. In this, the affordability of housing plays a large role but also, the ability of lower income groups to share appreciation of house prices. We foresee a hybrid model being developed that can allow people with little wealth to become part owners of their rental apartments. In this way, they can begin saving and slowly accumulate wealth through greater ownership of the apartment in which they live. To make room for the expanding urban population, land will also need to be redeveloped for housing around the city areas.

Finally, we would like to see cities developed in ways that promote our health and flourishing. Research from Juli Ontwerp and Wageningen University has found several factors in the built environment to be promotive of inhabitants' health. For example, they found that students' concentration and test results were higher in buildings that have wooden surfaces on the inside. Furthermore, plants and biodiversity inside and outside buildings positively contribute to residents' health and happiness outcomes. The shared spaces of buildings and neighbourhoods should also be such that they promote interaction between people and community formation. Juli Ontwerp identified half-public spaces, such as an open porch or a seating area in front of the house or apartment, as particularly helpful for creating the right conditions for spontaneous interactions.

Challenges we want to tackle

The road to sustainable, inclusive, and liveable cities is rid with complexity. It lies at the intersection of private and public enterprising and has a myriad of actors and interest groups. A few levers are particularly worthwhile to consider for having impact on the sector.

First, we agree with the United Nations in that housing should be addressed as a primary human need. Too often, housing is treated as an asset class where the primary beneficiary of properties are the owners of capital. In the development, maintenance and operations of housing, the welfare of the tenants and the planet are too often deprioritised and neglected to maximise the financial returns of the housing product. Tragically, the owners of these products are often pension funds, who‘s ultimate beneficiaries can be the very middle to low-income people who are affected. Aligning large housing investors' intentions and asset strategy with a broader impact definition is a crucial lever to move the needle within the sector.

Another source of inefficiency and stakeholder neglect lies in the limited time-horizons of the different parties in the building industry. Most developments are sold shortly after they have been delivered and then they are sold again up to a few times before eventually being demolished and ending up as landfill waste. While there is nothing inherently bad about the change of ownership, it does have the effect of limiting the time horizon of interest for every owner to the moment of the next sale. This leads to suboptimal maintenance, operations, and knowledge transfer and makes the owner-resident relationship more transactional than what it could otherwise be.

We also observe that the construction industry has stagnated in terms of productivity growth in the last three decades. On the whole, there has simply been no productivity growth in the construction industry for about 30 years. In a market that is undersupplied, and where there is inherent scarcity due to land being limited, the cost of stagnant productivity is passed on to consumers who end up paying an increasing share of their disposable income to cover their basic need for housing. There are many contributing factors to the stagnated productivity: construction is in some ways a conservative industry, managing risks is a priority of developers and contractors, knowledge transfer between projects is lacking, etc. In any case, tackling this aspect of the problem is a crucial piece in making housing more affordable in cities.

Breathe is already active in the housing sector through a company called Home.Earth. Read our case study of Home.Earth to know more about the work we are doing on „Changing real estate to serve the whole“.