The shortage of affordable housing is a growing issue around the world, even in emerging markets where demand is high, in part because traditional developers and real estate companies are focused on serving luxury housing seekers and want to avoid the huge operating costs associated with affordable housing, which can eat into their gross margins over time.
Lhoopa appears.
The Singapore-based startup combines technology with decentralized operations to partner with local experts such as brokers and builders to solve problems for people looking to buy housing, especially affordable homes. The six-year-old startup launched in the Philippine market, where there is demand for low-income housing of about 6.5 million units.
Marc-Olivier Cailleau (Co-Founder & CEO) and Sabrina Tan (Co-Founder & President) founded Lhoopa in 2018 shortly after moving to the Philippines from the US and experiencing first-hand the lack of platforms for finding affordable housing.
“Most people can afford affordable housing, but no one wants to build it for them because traditional developers don't think they can make enough profit on it,” Cayo told TechCrunch in an exclusive interview.
The average price of an affordable home in the Philippines ranges from $10,000 to $35,000 based on the socio-demographics of Lhoopa's target social classes, which include minimum wage earners such as blue-collar workers, community workers, factory workers, etc. In contrast, a luxury home in the Philippines can cost up to around $20 million.
Lhoopa has developed a technology platform that uses machine learning and AI to analyze market trends based on data from property listings created by local real estate agents and other channels. Once properties are identified, the startup sends them to brokers and contractors in its network to determine which properties are available for purchase, renovated or expanded, and make them available to potential buyers. The startup also uses its technology to digitize bureaucratic process flows and make documents available to multiple parties.
A Lhoopa employee looking at the software dashboard. Image courtesy of Lhoopa
Cayo told TechCrunch that the startup monitors around 9,000 different neighborhoods across the Philippines and can identify undervalued properties anywhere in the country.
Unlike housing marketplaces, Lhoopa doesn't connect with customers directly – instead, local agents sell properties through Lhoopa and handle services like loan applications and purchase documents.
“What’s unique about us is that we have completely decentralized the property, so we don’t have anyone on-site. [from our end]”Our brokers and contractors are local partners who do the work for us,” the co-founder said.
Lhoopa has developed dedicated apps for its broker and contractor partners. The app for brokers allows them to find buyers from available listings, while the app for contractors allows them to upload photos and videos of their work. The data from these apps is uploaded into Lhoopa's system, allowing the startup to pay commission to brokers and payments to contractors based on the work.
Lhoopa plans to expand its target customer base to include people without full-time employment, such as gig workers who work for app-based platforms like Grab.
The new Series B round includes $20 million in equity, co-led by the World Bank's International Finance Corporation (IFC) and Wavemaker Partners, with participation from Pavilion Capital, 10X Group, Concentric Equity Partners, UAE-based Mirath Investments and US-based NataRock Partners Fund. Existing investors Patamar Capital and Tekton Ventures also participated in the round. The funding also includes $60 million in debt financing from development finance institutions such as the Asian Development Bank and the US International Development Finance Corporation, as well as UK-based debt provider Lendable.
Cayot told TechCrunch that the debt was needed to buy real estate and expand its construction business. Because the company is already profitable, he said, the company decided not to sell many of its assets in order to make a large equity investment.
Lhoopa aims to use the new funding to expand its presence in the Philippines and beyond to other Southeast Asian countries, with plans to enter at least one country within the next 18 months. The company has 95 employees and around 5,000 agents and 100 contractor groups.
To date, Lhoopa has sold more than 2,500 affordable homes in over 58 cities in the Philippines, and Caillot told TechCrunch that the startup plans to provide more than 15,000 affordable homes in the Philippines alone over the next three years.
“Through this new partnership, we hope to close the affordable housing gap and promote inclusive development by supporting companies that provide digital solutions to first-time homebuyers and improve access to credit for low- and middle-income consumers,” Jean-Marc Arbogast, IFC country manager for the Philippines, said in a statement.
Prior to its latest funding round, Lhoopa had raised just under $4 million in equity and $2 million in debt.