Mumbai: Alex Hayim was sure he was going to have to say no. The head of the Indian operations of Reit Property Plc., a UK-headquartered real estate financier, he had been approached by a Kolkata developer who wanted Reit as a partner for a slum redevelopment project. Reit Property has been investing in the Indian real estate space for the past two years.
“We are not in the business of slum development,” says Hayim, explaining his initial reaction. But he went to Kolkata to see the slum and go through the contours of the project “out of sheer interest”. He came back impressed enough to invest just under $10 million (Rs40 crore) in the project to redevelop a 17-acre slum in central Kolkata. People living in the slum get proper bricks and mortar houses as part of the project, and Hayim and his partner, whom he refuses to name, get to develop and sell 500,000 sq. ft of commercial property.
Across India, slum redevelopment is becoming big business. The largest and most ambitious of these is the Maharashtra government’s plans to redevelop Dharavi, Asia’s largest slum that occupies 535 acres between Mumbai’s suburbs of Sion and Kurla on one side and the tony neighbourhood of Bandra on the other. Companies, including DLF Ltd, Hiranandani Construction Ltd, Kalpataru Properties Pvt. Ltd and those controlled by Mukesh Ambani’s Reliance Industries Ltd, Anil Ambani’s Reliance Anil Dhirubhai Ambani Group have sought initial details of the project (all told, some 100 firms have expressed interest in participating in the redevelopment).
The size of the slum redevelopment opportunity isn’t known. What is known is that from Tamil Nadu and Karnataka to New Delhi and Maharashtra, it is on the agenda of the local governments that see it as a way to improve the quality of lives of people living in slums and create space in the heart of the city for residential and commercial property.
Mukesh Mehta, a former New York real estate developer and the man behind the $2.5 billion plan to redevelop Dharavi, estimates the slum redevelopment opportunity in Mumbai alone at $225 billion.
Officials in the Maharashtra government have previously said that Dharavi’s redevelopment will be a pilot project for the development of other slums in the city. Around 7-8% of Mumbai has been classified as slums, says Mehta, and 60% of the city’s population live in slums. The government’s redevelopment plan for the slum includes schools, colleges and hospitals.
Developers are drawn to these projects because they have the support of the local government and offer them the opportunity to develop land in the city centre.
The developers get permission to build additional commercial or residential units in prime areas in return for providing free houses for slum dwellers.