Mumbai: Unitech Ltd, India’s second biggest developer, expects its share of sales from redeveloping Mumbai slums into luxury apartments to triple in three years and boost profit, managing director Sanjay Chandra said.

Resettlement plans: Unitech is developing 100 acres of land in Santacruz area by knocking down shacks and building apartments. Punit Paranjpe / Reuters

The world’s second fastest pace of economic growth is boosting incomes for India’s urban population and spurring demand for houses that cost at least 25 crore in a Mumbai suburb.

“Mumbai is a lucrative market and prices tend to go up firmly and demand is usually strong," said Jigar Shah, head of research at Kim Eng Securities India. “The measures to develop slum areas and build affordable homes will help lift return on equity and profit."

Mumbai properties may account for 40% of revenue in three years, up from the current 12%, Chandra said in an interview in Mumbai.

The government’s plan to redevelop shanty towns such as the 535-acre Dharavi slum near the new Bandra-Kurla business district has been delayed because of political indecision and disagreements, said Jockin Arputham, founder and president of the National Slum Dwellers Federation.

“It’s not easy to do redevelopment as moving people is a complex task," said Anshuman Magazine, New Delhi-based managing director of CB Richard Ellis for South Asia. “Not everyone may want to be relocated for economic reasons, not to mention legal and other regulatory issues, and the state of the real estate market."

Unitech shares closed up 0.4% at Rs88.75 each in Mumbai trading. They more than doubled last year compared with an 81% increase in the Sensex.

Unitech is also building budget homes. It has cut the time to build low-cost housing by 40% as it tries to boost revenue in a nation facing a shortage of 24.7 million homes.