Lhoopa's Innovative Approach to Affordable Housing in Emerging Markets

A growing global challenge, even in emerging markets with substantial demand, is the lack of affordable housing. Traditional developers and real estate companies often prioritize luxury homes, avoiding the high operating expenses associated with affordable housing, which can erode gross margins over time.

Enter Lhoopa, a Singaporean-headquartered startup addressing this issue by leveraging technology and decentralized operations. By partnering with local professionals, including brokers and building contractors, Lhoopa focuses on providing affordable housing solutions. The six-year-old startup began its operations in the Philippines, a market with an unmet demand of approximately 6.5 million units for low-income earners.

Founded in 2018 by Marc-Olivier Caillot (CEO) and Sabrina Tan (President), Lhoopa was born out of the founders' personal experience with the lack of platforms for affordable housing in the Philippines after relocating from the U.S.

"Most people can afford an affordable home, but no one wants to build it for them because traditional developers believe they don’t make enough money out of it," Caillot explains.

In the Philippines, an average affordable house ranges between $10,000 and $35,000, targeting minimum-wage earners such as blue-collar workers, community staff, and factory employees. In contrast, typical houses in the country range from $100,000 to luxury homes valued up to $20 million.

Lhoopa's platform uses machine learning and AI to analyze market trends based on data from listings created by local agents and other channels. The platform identifies properties and sends them to its network of brokers and contractors to assess their potential for purchase, renovation, or construction. The startup also digitizes bureaucratic processes, making documentation accessible to multiple stakeholders. Lhoopa monitors around 9,000 different areas across the Philippines to identify undervalued properties.

Rather than connecting directly with customers, Lhoopa allows local agents to sell properties and manage services such as loan applications and purchase documentation.

"What makes us very unique is that we totally decentralized real estate, so we do not have anyone on the ground [from our end], and our brokers and contractors are the partners on the ground to do the work for us," Caillot says.

Lhoopa has developed dedicated apps for its broker and contractor partners. The broker app helps them find buyers from available listings in real time, while the contractor app enables them to upload pictures and videos of their work to coordinate remotely with the head office. Data from these apps is integrated into Lhoopa’s system, facilitating the payment of commissions to brokers and contractors based on their work.

Lhoopa plans to expand its services to include housing for gig workers on app-based platforms like Grab. 

The startup recently raised $20 million in equity from investors including the World Bank’s International Finance Corporation (IFC) and Wavemaker Partners, with additional participation from Pavilion Capital, 10X Group, Concentric Equity Partners, Mirath Investments, and NataRock Partners Fund. Existing investors Patamar Capital and Tekton Ventures also joined this round. Additionally, Lhoopa secured $60 million in debt from development financial institutions such as the Asian Development Bank and the United States International Development Finance Corporation, as well as the U.K.-based debt provider Lendable.

Caillot notes that the debt was necessary to expand real estate acquisition and construction operations without diluting much of the company's holdings, given its profitability.

Lhoopa aims to use the new funding to enhance its presence in the Philippines and expand to other Southeast Asian countries, with plans to enter at least one new country in the next 18 months. The company currently employs 95 staff members, along with 5,000 agents and 100 contractor groups.

To date, Lhoopa has sold over 2,500 affordable houses across more than 58 cities in the Philippines. The startup plans to provide over 15,000 affordable homes in the Philippines over the next three years.

Jean-Marc Arbogast, country manager for the Philippines at IFC, states, "With this new partnership, we hope to help close the gap in affordable housing and promote inclusive development by supporting a company that provides digital solutions to first-time homeowners and improved access to financing for low- to mid-income consumers."

Before the latest funding round, Lhoopa had raised less than $4 million in equity and $2 million in debt.