Mumbai: After redeveloping a huge slum pocket in a Mumbai suburb, Unitech Ltd, the nation’s second largest developer by market value, has chalked out a growth plan in the city’s real estate market, entirely through slum redevelopment.
New Delhi-based Unitech is developing large tracts of encroached land across Mumbai through its 50% owned subsidiary, Shivalik Ventures Pvt. Ltd. Like any other such scheme, the slum dwellers will be resettled first and then residential and commercial spaces will be built on the land where the slums stood.
Shivalik Ventures, in which Mumbai-based Rohan Developers Pvt. Ltd holds 25% (the rest is with smaller companies with expertise in slum makeovers), is currently working on six such projects, each costing more than Rs1,000 crore.
In Mumbai, which has the largest slum population in the country, finding unencroached land for development has become difficult. More than half of Mumbai’s 12 million people live in slums, according to the 2001 census.
“Developing slum land is the only way to build in Mumbai now. Developers like Unitech realize the potential of such projects, though it isn’t easy and entails a long process of approvals,” said Haresh Mehta, managing director of Rohan Developers.
To clear the early hurdles, Unitech takes help from its partners. In each project, the initial groundwork—conducting surveys to find out the number of slum dwellers to be relocated, framing project proposal, procuring mandatory clearances such as from the Slum Rehabilitation Authority—will be done by the local partners. Unitech will come into the picture when commercial development starts, Mehta said.
“We would have felt lost if we had to do these slum redevelopment projects on our own in Mumbai. We are lucky to have good local partners who are supporting us in many ways to execute these projects,” said P.K. Magu, Unitech’s executive director.
Anuj Puri, country head of property consultant Jones Lang LaSalle Meghraj, said slum rehabilitation is a specialized job. “This is why even a professionally managed company like Unitech would get into a local partnership, which would make the going easier for it.”
Puri said another way to be a part of the city’s development would be by buying land, but the cost of land is a major barrier. “Developing slum land is a more economical entry because Unitech would come into action only after the land is cleared of slum dwellers and approvals are in place.”
Sarang Wadhawan, managing director of Housing Development and Infrastructure Ltd (HDIL), agrees that slum redevelopment is a specialized game because the companies involved would have to deal with people at different levels. “It’s a challenge everyday.”
Unitech’s first project, also through Shivalik Ventures, is in Vakola, a 127-acre sprawl along the Western Express Highway and not far from the commercial district of Bandra-Kurla.
The project had US investment bank Lehman Brothers Holdings Inc. picking up a 50% stake for Rs750 crore in one commercial building.
Unitech is also redeveloping a 25-acre slum pocket in Mumbai’s posh residential suburb of Juhu. Almost 4,000 families will be relocated under this project for which the master plan is being prepared by New York-based architectural and engineering firm Skidmore, Owings and Merrill Llp. The same architect has designed the Vakola project.
The slum resettlement will open up more than 250 acres for developing into housing and commercial space.
Slum redevelopment is tempting because the profit margins are substantially higher than in regular residential or commercial projects, says Wadhawan of HDIL, a major slum redeveloper itself.
With the Delhi Development Authority (DDA) firming up plans to initiate redevelopment of slums in the Capital, it wouldn’t be long before Unitech can explore opportunities in the city where it belongs.
But, Magu says the company isn’t very keen. “Though we have done a couple of flyovers for the DDA, their conditions are more difficult than in Mumbai and the margins are much lower.”