India’s Gautam Adani Wants to Redevelop Giant Slum From ‘Slumdog Millionaire’
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India’s Gautam Adani Wants to Redevelop Giant Slum From ‘Slumdog Millionaire’

Billionaire’s Adani Properties is expected to get contract to replace narrow streets and shanties of Dharavi in centre of Mumbai

By SHEFALI ANAND
Thu, Apr 13, 2023 8:28amGrey Clock 7 min

MUMBAI—Billionaire Gautam Adani has become India’s largest airport operator. He runs coal mines and the country’s largest private port. Now he has set his sights on a massive redevelopment of India’s most iconic slum.

Dharavi, a slum in the centre of Mumbai, gained international fame after being featured in the 2008 Oscar-winning film “Slumdog Millionaire.” It was well known to many Indians long before that, and the city of Mumbai has had plans to replace its shanties with gleaming high-rises for nearly 20 years.

The complexities of relocating the estimated one million people who live and work in an area about two-thirds the size of New York’s Central Park have so far thwarted those efforts. Dharavi is a city within a city. Redeveloping it in the middle of Mumbai will be akin to razing a section of Manhattan—but a far more densely packed version.

The developer will need to house all of those people during construction. Businesses will be disrupted. There will be disagreements about compensation. Protests are expected. Costs will mount.

A man selling plastic toys on the narrow streets of Dharavi. PHOTO: ISHAN TANKHA FOR THE WALL STREET JOURNAL

Thousands of people who live on rent in Dharavi fear that once high-rises come up, the rents will rise sharply, forcing them to move out. “They will remove the poor, not the poverty,” said Mohammed Giasuddin Riaz Ansari, a 46-year-old who has lived in Dharavi for more than 20 years.

Mr. Ansari shares a 300-square-foot rented room with 14 men of his extended family, and makes a living selling toys and balloons in the lanes of Dharavi. He said he manages to save $25 to $35 a month to send to his wife and five children who live in a village in Bihar, one of India’s poorest states. If he has to relocate, he said he would have to build his clientele from scratch. “For anyone with a business, this is not good,” he said.

Mr. Adani, who runs a business empire ranging from infrastructure to energy, has had his hands full lately with a dispute of an entirely different nature. His conglomerate, Adani Group, has come under tremendous market pressure since U.S. short seller Hindenburg Research alleged stock price manipulation in its listed companies. The Adani Group has disputed the allegations, but seven listed Adani companies have lost more than $100 billion in stock market capitalisation since the report came out. Adani and his family members said they have prepaid nearly $2 billion of loans since February.

Some of those wary of the redevelopment have questioned whether the financial pressure on Mr. Adani will strain his ability to finish such a massive project. “How will he do it? Who will give him the money?” said Raju Korde, an activist who has in the past protested against Dharavi redevelopment plans.

Mr. Korde said those who live in the slum worry that if Mr. Adani runs out of money and the project drags on for years, many in the slum will get fed up and leave, something that has happened in other redevelopment projects. “There are thousands of people in Mumbai who have given up their rights,” said Mr. Korde. If need be, those who live in Dharavi will protest, he said.

City officials aren’t concerned about Mr. Adani’s ability to finance the project, said S.V.R. Srinivas, metropolitan commissioner of the Mumbai Metropolitan Region Development Authority, a government body in charge of infrastructure development. The city estimates the redevelopment project could end up costing more than 200 billion rupees, equivalent to $2.4 billion.

Adani Properties Pvt., a unit of Adani Group, made the highest bid for an initial investment of about $615 million for the redevelopment, and the government is expected to formally award the contract to the company soon, Mr. Srinivas said. The developer would be responsible for any additional costs required to complete the project.

“It will be a first huge step toward slum-free Mumbai,” Mr. Srinivas said. The government has been trying to find a developer who would take on the work since 2004 but hasn’t been able to find them because of the complexity of the project, he said.

Slums such as Dharavi have flourished in large cities of many developing countries, where people come from rural areas to look for work but don’t find affordable housing. More than one billion people live in slums worldwide; in India, they make up half of the urban population, according to the World Bank.

Homes in Dharavi are so densely packed that they are separated by winding lanes barely 3 feet wide in many places. On a recent afternoon, children played in the lanes, rats scurried along the sides, and women sat on the doorsteps of windowless homes.

Rekha Deepak Gade welcomes the Dharavi redevelopment plan: ‘If it is improved, how nice it will be.’ PHOTO: ISHAN TANKHA FOR THE WALL STREET JOURNAL

A typical home in Dharavi is just a room, about 10 feet by 12 square feet, with anywhere from two to five residents. They rely on public toilets, with 50 to 60 people on average per toilet, according to some estimates. Some homes are made of corrugated metal sheets and tarpaulin, but many residents have invested to build concrete walls and roofs. As families have grown, they have built rooms on top of existing ones, using scrap materials, wood and plastic.

The redevelopment plan requires that the builder make new homes, with more space and private toilets, and give them free to those who meet the government’s eligibility criteria, which includes, among other things, that they must have been living in a Dharavi home that existed before Jan. 1, 2000. In addition, Dharavi will get wider roads and be hooked up to utilities such as water, gas and a sewage system, according to the government’s tender.

In return, the developer gets the right to build residential and commercial buildings on prime real estate. Next door to Dharavi is the Bandra-Kurla complex, one of India’s most expensive office markets, where the U.S. Consulate is located and global banks such as Standard Chartered PLC and BNP Paribas SA have offices.

The new homes for those who live in Dharavi must be ready within seven years under the government’s plan, while the developer has 18 years to build the commercial and residential property that will be sold on the open market, said Mr. Srinivas.

Local real-estate experts say these timelines are ambitious. “It is not going to be a cakewalk that they will start and everything is…smooth,” said Pankaj Kapoor, founder of Liases Foras Real Estate Rating and Research Pvt in Mumbai. “There would be agitations, there would be resolutions, and then it will take its own prolonged time.”

Some Dharavi residents have built rooms on top of existing ones. PHOTO: ISHAN TANKHA FOR THE WALL STREET JOURNAL

Beyond the complexities of compensating and housing Dharavi’s people, the project is also facing legal challenges. In 2019, a consortium led by a Dubai-based company, Seclink Technologies Corp., won a bidding process for Dharavi’s redevelopment. The government later canceled that tender, saying there had been a material change in the circumstances of the plan. The government put out a new tender last year. Seclink has filed a petition in the Bombay High Court challenging the cancellation of the tender awarded to it.

Last month, several opposition party leaders alleged, in a letter to a federal law-enforcement agency, that awarding the project to Adani Properties is an example of how companies owned by the Indian billionaire have “exercised improper influence to obtain concessions and contracts from governments.”

A spokesman for Adani Group said that Adani Properties won the right to redevelop Dharavi through an open and transparent bidding process.

Some longtime residents welcome the redevelopment plan, hoping it will lead to a cleaner, safer Dharavi. “If it is improved, how nice it will be,” said Rekha Deepak Gade, a 41-year-old single mother who lives with four children in a 100-square-foot room.

Yusuf Galwani runs a family business in Dharavi making earthenware by hand. PHOTO: ISHAN TANKHA FOR THE WALL STREET JOURNAL

But many are worried about what the project portends for their future.

Malliga Gunashekaran, 47, who moved in 2008 to her current home in Dharavi, where she lives with her husband, son and mother-in-law, said she isn’t sure if they meet the eligibility criteria to get a free home. “There is tension,” she said.

Yusuf Galwani runs a family business with his two brothers in Dharavi, where they make earthenware by hand. His grandfather started out as a clay potter in Dharavi more than 100 years ago. He and his brothers have expanded the workshop in the space-starved slum by building one floor on top of another. They have built a kiln to fire the pottery on the fourth floor. They fear they may not get this much space in a redevelopment.

Mr. Galwani said that over the years he and his brothers have refused lucrative job offers, to continue their family craft. They want to expand their grandfather’s business to greater heights and can’t imagine doing it anywhere else, he said.

“We don’t want to leave Dharavi,” he said. “Our hearts won’t allow it.”

Slums like Dharavi have flourished in large cities of many developing countries. PHOTO: ISHAN TANKHA FOR THE WALL STREET JOURNAL


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Stronger demand in some areas is pushing unit rents up faster than houses

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Renters are returning to the apartment market, leading to higher growth in weekly rents for units than houses over the past year, according to REA data. As workers return to their corporate offices, tenants are coming back to the inner city and choosing apartment living for its affordability.

This is a reversal of the pandemic trend which saw many renters leave their inner city units to rent affordable houses on the outskirts. Working from home meant they did not have to commute to the CBD, so they moved into large houses in outer areas where they could enjoy more space and privacy.

REA Group economic analyst Megan Lieu said the return to apartment living among tenants began in late 2021, when most lockdown restrictions were lifted, and accelerated in 2022 after Australia’s international border reopened.

Following the reopening of offices and in-person work, living within close proximity to CBDs has regained importance,” Ms Lieu said.Units not only tend to be located closer to public transport and in inner city areas, but are also cheaper to rent compared to houses in similar areas. For these reasons, it is unsurprising that units, particularly those in inner city areas, are growing in popularity among renters.

But the return to work in the CBD is not the only factor driving demand for apartment rentals. Rapidly rising weekly rents for all types of property, coupled with a cost-of-living crisis created by high inflation, has forced tenants to look for cheaper accommodation. This typically means compromising on space, with many families embracing apartment living again. At the same time, a huge wave of migration led by international students has turbocharged demand for unit rentals in inner city areas, in particular, because this is where many universities are located.

But it’s not simply a demand-side equation. Lockdowns put a pause on building activity, which reduced the supply of new rental homes to the market. People had to wait longer for their new houses to be built, which meant many of them were forced to remain in rental homes longer than expected. On top of that, a chronic shortage of social housing continued to push more people into the private rental market. After the world reopened, disrupted supply chains meant the cost of building increased, the supply of materials was strained, and a shortage of labour delayed projects.

All of this has driven up rents for all types of property, and the strength of demand has allowed landlords to raise rents more than usual to help them recover the increased costs of servicing their mortgages following 13 interest rate rises since May 2022. Many applicants for rentals are also offering more rent than advertised just to secure a home, which is pushing rental values even higher.

Tenants’ reversion to preferring apartments over houses is a nationwide trend that has led to stronger rental growth for units than houses, especially in the capital cities, says Ms Lieu. “Year-on-year, national weekly house rents have increased by 10.5 percent, an increase of $55 per week,” she said.However, unit rents have increased by 17 percent, which equates to an $80 weekly increase.

The variance is greatest in the capital cities where unit rents have risen twice as fast as house rents. Sydney is the most expensive city to rent in today, according to REA data. The house rent median is $720 per week, up 10.8 percent over the past year. The apartment rental median is $650 per week, up 18.2 percent. In Brisbane, the median house rent is $600 per week, up 9.1 percent over the past year, while the median rent for units is $535 per week, up 18.9 percent. In Melbourne, the median house rent is $540 per week, up 13.7 percent, while the apartment median is $500 per week, up 16.3 percent.

In regional markets, Queensland is the most expensive place to rent either a house or an apartment. The house median rent in regional Queensland is $600 per week, up 9.1 percent year-onyear, while the apartment median rent is $525, up 16.7 percent.

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