The Business Year

Dario Herrera

ECUADOR - Real Estate & Construction

Dario Herrera

Minister, Ministry of Housing and Urban Development

Bio

Dario Herrera has a license as Operator of the Guayaquil Stock Exchange, multiple certificates, and training diplomas in branches related to strategy, projects, finance, and real estate marketing. He has held management positions in several companies dedicated to the beverage industry and commerce in Manabí, known as the Grupo Herrera. He has dedicated himself to real estate, developing investment projects in the residential, commercial, and hotel sectors in the US, Belize, and Ecuador. He was vice president of business development of the Real Estate Montecristi S.A., owner of the Montecristi Golf Resort & Villas project, and has served as managing partner of Point Investment, LLC in the US.

More than just providing social housing solutions, the Ministry of Housing and Urban Development is looking further into the future to ensure that it also creates an entire ecosystem with job creation and attracting investment.

What is the roadmap of this administration in order to deliver more homes?

We have redefined the scope of our program and are looking to provide 429,000 of what we call habitat solutions. Ecuador has 4.7 million homes, but there is a quality deficit of about 2.7 million homes, which are homes that need to be repaired or upgraded. More than just building 200,000 rural homes, we are looking at developing 429,000 habitat solutions, which includes four different areas. The first of the four programs are houses. The second are kits that will directly attack the deficit problem, and there are four types of kits: secure water or safe water; sewer solutions; remodeling; and in-home enhancement. We are looking at about 227,000 kits. The third program is about providing 129,000 land titles for homes that are already built or consolidated, and the fourth is special habitat projects. This mixture of solutions was designed to tackle and reduce the quality and quantity of the deficit in Ecuador within budget and following a timeframe. We have inherited a large debt, and therefore we are developing the proper incentives so the private sector can contribute to building these solutions for social housing with help from the program.

Can you talk about the first phase of the plan of Ecuador: Destino de Inversión Inmobiliaria (Ecuador: Real estate investment destination)?

The Ministry of Housing and Urban Development in Ecuador has always been seen as the ministry that builds small houses for poor people; however, people who live in social housing need to work. You cannot solve any problems by giving out free housing if the people living there do not have jobs. There is a dual purpose in wanting to make Ecuador a real estate investment destination. Ecuador is now on the radar when it comes to being an investment destination for real estate. It is about creating an ecosystem and production system. Take, for example, tourism on the coast. If we promote hotels and timeshares, they will encourage a need for commercial facilities. The commercial facilities will then require housing because people are working there. That is where social housing can come in.

What is the desired goal in terms of job creation in this plan?

If everything works out well, the plan will create 282,000 direct adequate jobs in the next four years. We have a formula to come up with this number: six jobs created per year for every three social homes measuring at least 56sqm. These are formal jobs, meaning that they will pay social security. Then, there will also be three times as many indirect jobs generated related to the construction industry. These indirect jobs are across sectors, like hardware stores, notaries, real estate agents, food deliveries for lunch the construction site, and so on. We positively affect over 24 economic systems and sub-systems within the economy. The construction impact is extremely important for the economy. There is a program in place for the last 31 months called the interest rate subsidy, which subsidizes the interest rate for the purchase of a new home. Within the seven months that we have been operating, we have registered 11,120 new homes to be built, or 48% of the total in 31 months. We went from 496 registrations per month to over 1,500 houses. We call that the “Lasso effect” because people trust that the regulations are working. We want to send a message to investors abroad that this ministry has gone from zero to where we are now by simplifying processes and eliminating bureaucratic procedures. Everything is now done online. By increasing the number of projects registered, we have more investors investing in social housing that are selling to clients who will eventually receive a credit with an interest rate subsidized by the government. This project has created 46,000 new jobs in just seven months.

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