After nearly fifteen years of talks and three attempts to redevelop Dharavi, one of the largest slums of Asia, the state government of Maharashtra has invited global tenders to initiate the process. The minimum stipulated bid amount for the redevelopment of the slum spread over 593 acres in the heart of India’s commercial capital has been set at Rs 3,150 cr. The tenders will be available between November 28 and December 28, which is also the last date for submission of the bids.
The selected lead partner is expected to form a special purpose vehicle (SPV) with its own contribution of 80% equity worth Rs 400 cr, while the government of Maharashtra will infuse Rs 100 cr to hold 20% equity in this entity. Apart from equity worth Rs 400 cr, any further investment needed for the project will be brought in by the lead partner in the form of compulsorily convertible instruments including debentures and preference shares.
This SPV will be required to construct free housing for eligible slum dwellers and occupants including amenities and infrastructure as per the terms stipulated by the state government, according to the public notice issued by the officer on special duty, Dharavi Redevelopment Project, that falls under the purview of the Slum Rehabilitation Authority.
In lieu of this, the SPV will be entitled to construct free sale area to sell in the open market. The project will get floor space index (FSI) or permissible development rights of four times.
The Maharashtra government has recently decided to redevelop Dharavi as an integrated planned township and a special project. For this, it has notified entire Dharavi as a notified area and appointed Slum Rehabilitation Authority as a special planning body.
The state government has been looking to redevelop this slum for long as this would be a major game changer not only for the city of Mumbai but will also change the political landscape for the years to come.
The earlier plan was to divide Dharavi into five sectors. As per the old plan, MHADA was to redevelop one of the sectors and four others were to be redeveloped through private participation. However, the plan did not progress much with exception of few buildings constructed by MHADA in sector V.
The state government has now given a go ahead for redeveloping the entire Dharavi as a single project and floating one global tender for the entire project. According to industry experts, this project will be a big opportunity not only for the slum dwellers but also help urban planners, human rights activists and the state government to transform the face of Mumbai city altogether.
“Dharavi redevelopment project, when completed, can change the entire real estate scenario here. Dharavi rubs shoulders with upmarket Bandra and is right next to the avant-garde Bandra-Kurla Complex. This makes Dharavi an incredibly attractive proposition for homebuyers, investors and developers alike,” said Anuj Puri, chairman, ANAROCK Property Consultants.
According to him, the project will also ease the residential pressure on South Mumbai localities and open new avenues for further real estate development. Besides being a residential cluster, Dharavi is also a major economic hub where people produce a wide array of goods and services including leather bags, pottery, snacks and many other commodities.
In fact, the previously failed attempts by the state government to rebuild Dharavi have now prompted a new angle — the area is now being promoted as Mumbai’s new business district.
However, as of now, we are nowhere near to being close to such a fortuitous culmination of the Dharavi story. For all we know, a particularly insightful film which does not play as much on plight and sordidness but rather focuses on real-time solutions could eventually provide an answer. Certainly, urban planners and governments have not been able to do this.
Interestingly, the state government also quashed its earlier plan of redeveloping Dharavi as only a residential cluster. It is now looking to redevelop the area into a hub for business and commercial activity too, given its central location and proximity to business district Bandra-Kurla Complex (BKC). The government has also extended fiscal sops and indirect subsidies to the project, including waiver of stamp duty on the development rights agreement and the first sale of the saleable area.
However, Dharavi is not an area of contention and confusion on the basis of costs alone. The biggest question is of land ownership and relocation of its existing inhabitants. 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 keep in mind that as many as 60,000 families currently live in Dharavi.