Dharavi redevelopment project a veritable realty goldmine, say experts

Sensitive rehab, retaining local jobs key challenges in Adani's mega project

Sensitive rehabilitation of local residents while maintaining their livelihoods is going to be a key challenge before the Adani Group in redeveloping Dharavi, say experts in real estate business.

However, these real estate professionals have no doubts on Adani's capabilities and resources to develop a complex and large project such as Dharavi.

The Adani group emerged as the highest bidder early last week, for the 259-hectare Dharavi Redevelopment project, with an offer of Rs 5,069 crore. Delhi-based real estate developer DLF was a distant second, with a bid of Rs 2,025 crore.

Adani gets to sell millions of square feet of residential and commercial space as part of the project.

The bid is for the entire Rs 20,000-crore project, the total timeline for which is seven years to rehabilitate 650,000 slum dwellers spread over 2.5 square kilometres area right now.

"...more than the technical challenges about densities and height restrictions, social rehabilitation of the slum residents shall be the biggest stumbling block and Adani has to handle it delicately to succeed in this redevelopment plan," said Gulam Zia, senior executive director at Knight Frank, a property consultant.

Though the project will have a lucrative FSI (floor space index) of four, it comes with a height restriction due to proximity to the airport, the state government said earlier. FSI or floor space index is the permissible construction allowed on a plot of land.

Besides supporting the residential needs, Dharavi has thriving small sector units that sustain the needs of the residents and provide for a huge consumer base. Any negative impact on the livelihood of these residents can meet with tremendous resistance like in the past, Zia said.

Dharavi is home to the potter community and leather goods makers who have been doing business in the shanty-town for decades.

However, Zia added that with a strong player like Adani, the project would finally become a reality.

Prashant Thakur, senior director and head of research at Anarock Property Consultants, said that the challenge with the redevelopment of Dharavi is that too many stakeholders are involved and managing them is a big task. This is a key reason why it did not take off in the past.

“The key to the success of one of the largest redevelopment projects in the world is to re-align the development scope with a more sensitive rehabilitation programme flexible enough to incorporate an interdisciplinary approach that suits the local socio-economic conditions," said Thakur.

However, he says that since Adani has resources and experience in managing big and complex projects, this time it could sail through.

Amit Goenka, managing director and chief executive of fund manager Nisus Finance agrees."The Adani group has the necessary resources to undertake a global-scale complex project such as this, given its deep engagement in infrastructure and real estate. The group has demonstrated its prowess in raising global capital and partnerships to execute the master plan across asset class components,” he said.

On the flip side, Goenka said that there is no template to rehabilitate such large scale tenements, including finding temporary accommodation for the residential, commercial and cottage industry occupiers." Managing local issues, ecological sensitivities including Mithi river and balancing rehab, sale and infra portions is a herculean task. The ability to find saleability acceptance by a wider consumer and occupier audience in Dharavi and hence monetising the project may take time," he said.

Sustained central, state and local body support for over a decade are also essential for seamless execution, he added.

The Adani group did not reply to an email seeking comments.

Sanjay Dutt, managing director of Tata Realty and Infrastructure, said that since the project is very large, it requires a lot of planning on the environment front as well.

"It can potentially disrupt supply dynamics and lead to a correction in suburban property prices, as most would like to consider Central Mumbai (to buy houses) due to better connectivity to Navi Mumbai through the trans-harbour link and proximity to Navi Mumbai Airport," he said, adding that the profile of Dharavi is low, hence lots of design elements from reputed architects are essential for the success of the project.

Niranjan Hiranandani, managing director of the Hiranandani group, said that since Adani is developing Navi Mumbai Airport where it has hundreds of acres, it can develop large properties on both sides of the city.

"You should also know that every large project has challenges but with the kind of resources and people it has, Adani can easily manage it," he said.

Realty goldmine

Dharavi is just a 15-minute drive from the financial hub of Bandra Kurla Complex (BKC). After redevelopment, Dharavi would be an extension of BKC and would fetch good selling prices, said Dutt of Tata Realty.

"If you recall, BKC was fetching Rs 10,000-Rs 11,000 per sq ft for residential properties. Today it commands Rs 65,000 per sq ft for luxury properties. Costs have gone up and so have values," Dutt said.

Goenka of Nisus Finance said while labour, input and other costs have gone up three-fold in the real estate sector, selling prices have risen four times. He added that the project would be very profitable for developers.

"Since it is close to BKC, there would be huge interest for properties there," he said.