Lhoopa wants to make quality affordable housing a reality in the Philippines, where a severe dwelling shortage is projected to more than triple to 22 million needed-but-unbuilt units by 2040. The startup, based in metropolitan Manila, leverages its network of housing contractors, brokers and sales agents across the 120 million-strong nation to build and sell affordable houses. The properties cost roughly $8,500 to $34,200, and their mortgages can be as low as $54 a month.
The International Finance Corp. and early-stage investor Wavemaker Partners co-led the $20 million Series B equity investment. That paved the way for $60 million in debt from the Asian Development Bank, the US International Development Finance Corp. and emerging markets fintech investor Lendable in London. Pavilion Capital, 10X Group and Concentric Equity Partners also participated in the equity round.
Lhoopa will use the funding to launch green housing operations and scale beyond the 58 Filipino cities where it has already built and sold more than 2,500 houses. It cited CB Insights as saying its funding was among the largest ever by a startup in the Southeast Asian country.
Affordable housing shortfall
The Philippines made headlines this year for its booming high-end housing market, where developers focus on luxury condominiums and township estates for wealthier urban dwellers. Property prices nationwide surged 27% in the third quarter of last year compared to the prior year, according to data cited by Santos Knight Frank in its Philippines Real Estate Outlook 2024. Driving the increase: a more than 21% spike in prices for luxury residential properties, the fastest in the world.
The race by developers to meet the high-end demand is leaving a gap for affordable solutions: The Philippines has a current backlog of 6.5 million units for its 3.7 million informal settler families and low-income earners. Lhoopa identifies high-demand areas for “socialized housing” and “economic housing” — less expensive than low-income housing — and works with more than 100 local small-scale contractors for renovation and construction and more than 4,000 local real estate agents, helping promote local employment.
Affordable = profitable
The Philippines has a cumbersome system that manually documents housing applications and mortgage payments, and middlemen who charge fees. That drives up operational expenses for home builders, fueling an assumption that low-cost housing isn’t as profitable.
“Affordable housing is not typically seen as a venture play, but we believe Lhoopa is solving a long-standing problem that will only worsen unless it is addressed,” said Paul Santos, a co-founder and managing partner of Wavemaker Partners.” Founded in 2018, Lhoopa aims to build and sell 15,000 residential properties in the next three years.
The ADB earlier this year offered Lhoopa a revolving credit facility of around $20 million to acquire, renovate, construct and sell affordable properties for around $15,000 to average income earners such as administrative workers, security guards, factory laborers and teachers. Last May, the startup secured $12.5 million, also Series B, from NataRock Partners, Patamar Capital and Wavemaker Partners.
