Dharavi redevelopment may dampen real estate prices in Mumbai

Niranjan Hiranandani, managing director of Hiranandani Group, says the rehabilitation needs to be accomplished in a timely manner

Dharavi slums, spread across 178 hectares of prime real estate in central Mumbai, have been neglected for over a century due to their dismal living conditions, filth, and overcrowded spaces. Despite these drawbacks, Dharavi, famously dubbed the "world's largest slum," has always offered a haven for poor migrants from all over India.
 
The surge in the Indian economy and the transformation of the city into a bustling megalopolis have not touched Dharavi until now. However, this could soon change. The Adani group has secured the mandate to transform these slums into commercial and residential complexes. Interestingly, Dharavi, known globally for its depiction in the film "Slumdog Millionaire," might offer an unexpected gift to the city: affordable real estate.
 
Real estate analysts suggest that the Rs 23,000 crore project could decrease real estate prices in the surrounding areas, where rates currently stand as high as Rs 20,000-25,000 per square foot. If executed successfully, the Maharashtra government's plans could provide a windfall for the Adani group from Mumbai's real estate sector while also granting Dharavi's impoverished residents access to free housing.
 
Additionally, the project could enable Mumbaikars to relocate from distant suburbs to central Mumbai, located adjacent to the financial district of Bandra Kurla Complex (BKC), the under-construction bullet train terminal/Metro rail, and South Mumbai.
 
"Building affordable to mid-range housing projects in Dharavi could completely transform the residential real estate landscape of central Mumbai. When completed, the Dharavi redevelopment project could alter the entire real estate scenario. Its proximity to upmarket Bandra and the avant-garde Bandra-Kurla Complex makes Dharavi an incredibly enticing proposition for homebuyers, investors, and developers alike," states Anuj Puri, Chairman of the Anarock Group, a real estate advisory firm.
 
Dharavi, situated on the northernmost tip of Mumbai island city near Mahim Creek, has supplied low-cost labour to textile mills, leather tanners, and food factories over the past century. Bloomberg estimates that these units annually sell products worth $1 billion (Rs 8,100 crore).
 
The growth in opportunities in India's financial capital has led to the expansion of these slums, rising from single-story structures to unsafe four-story tenements. According to a 2007-08 survey, there were approximately 49,643 slum dwellers (39,208 residential and 10,435 commercial) and 9,522 chawl dwellers (6,981 residential and 2,541 commercial). It is estimated that the Adani group will rehabilitate about 4,818 slum dwellers living on railway land.
 
Sanjay Dutt, CEO of Tata Realty, describes the redevelopment as a unique opportunity to address the city's deficiencies, particularly in terms of social infrastructure like hospitals, schools, colleges, sports, and recreational facilities. "This will enhance the hygiene and lifestyle of over 75,000 families currently living in undesirable conditions. The magnitude of the project and the need for capital will also attract foreign investment," Dutt said.
 
Global financial giants, including Blackstone Group, GIC of Singapore, KKR & Co, and Brookfield Asset Management, have already invested heavily in Mumbai’s real estate projects near the Dharavi slums. Local real estate titan Macrotech Developers, or Lodha, has erected a Trump-branded tower where apartments sell for Rs 8 crore and above.
 
However, thousands of Dharavi residents feel left behind by the economic liberalisation initiated by the Indian government three decades ago. "We have no information about the redevelopment thus far, and no one has contacted us. We hope that this time the redevelopment succeeds," says Khalid Shaikh, a Dharavi resident.
 
Niranjan Hiranandani, managing director of the Hiranandani Group, acknowledges that the timely rehabilitation of residential houses and commercial buildings is a daunting task. He expresses concerns about the delay in the project's initiation and emphasises the need for a comprehensive execution roadmap. "This redevelopment is undeniably one of the premier real estate projects that will transform the city's skyline, enhance quality of life, attract significant investments, and create ample jobs. It requires a multi-pronged approach and the unwavering support of the government and regulatory authorities," Hiranandani said.
 
Puri notes that previous unsuccessful attempts by the State Government to rebuild Dharavi prompted them to promote the area as Mumbai’s new business district. He mentions significant challenges, such as the overall development cost, land ownership, and relocation of the existing inhabitants. Puri adds, "In terms of land ownership, almost one-fifth of the land here is privately owned. In terms of rehabilitating the existing occupants, one needs to consider that over a million people need to be resettled. It's quite a challenge to rebuild this mega project, but if completed on time, it can benefit all the stakeholders concerned."
 
Gautam Adani, Chairman of the Adani group, shared in a social media post his vision for a new Dharavi that embodies the quintessential spirit, grit, unity, and determination of Mumbai without losing the timeless essence of the old Dharavi. "Gone will be the pain of inadequacy, replaced by a new Dharavi that hums with pride," Adani promises.