In May 2006, Housing Development and Infrastructure Ltd (HDIL) and Gujarat’s Adani Group struck a Rs2,250 crore deal to develop a plot in Mumbai’s emerging business district, Bandra-Kurla Complex (BKC). The land was acquired by HDIL as part of a slum redevelopment project it had carried out in the area.
What really convinced Reit Property’s Hayim to invest in the Kolkata slum redevelopment project was the state government’s support for it. The West Bengal government is driving the Kolkata Environmental Improvement Project or KEIP. The Kolkata Municipal Corporation has created a special purpose vehicle to oversee the Rs3,000 crore project, which is funded by the Asian Development Bank. The project has also attracted several infrastructural and construction firms, including Simplex Infrastructure Ltd, Nagarjuna Constructions Ltd and Tantia Constructions Ltd. These firms have been contracted to develop sewage systems and build houses, schools and hospitals in the area. The project is already in its second phase of implementation.
“The business opportunity is not only in redeveloping slum buildings—I see a far bigger opportunity in developing the related infrastructure that the government is trying to put in place, roads, schools and hospitals,” says Ashish Kalra, partner, Trinity Capital LLC, a New York based India-focused real estate fund. Last October, the fund invested $23.32 million in a Mumbai slum redevelopment project along with the city-based Lokhandwala Group. The investment gives Trinity a 49% stake in a redevelopment project in Worli.
Since then, Kalra has invested close to $150 million in several slum redevelopment projects along with some local builders. Kalra says that he would prefer to call these projects “urban rejuvenation projects rather than slum rehabilitation since we see them as socially-aware investments”.
Kalra wants to participate in developing roads and other basic infrastructure such as drainage and sewage in the slums being redeveloped. He is also putting together a consortium along with local partners that will invest in Dharavi.
Hayim, however, plans to stay out of Dharavi given Mumbai’s soaring real estate rates and land prices in Mumbai, and growing opposition to the slum’s redevelopment in some quarters.
The Dharavi redevelopment project has been condemned by people who live in the slum and who have created a vibrant self-sufficient economy of potteries, tanneries and other small industries among the narrow lanes. The slum has about 5,000 single-room factories and hundreds of cottage industries that together have a turnover of around $1 billion. “Most know Dharavi as a slum where poor people live,” says Abu Khalid Anjum, president of Dharavi Businessmen’s Welfare Association. “Not everyone knows how productive this place is,” he adds.
Under the terms of redevelopment, 57,000 families will move to high-rise residences close to where they currently live. Each family is entitled to 225 sq. ft of housing with its own indoor plumbing. Residents aren’t happy because they say the new apartments cannot be turned into workshops and factories. “Are we to run our business from cubby holes?” asks Nisar Ahmed who runs a plastic recycling unit in the slum.