Providing Affordable Housing in Mumbai

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Quick calculations showed that, given construction costs in the 1990s, profits made from the market-rate sale of 560 apartments would finance 1,000 free homes for slum-dwellers. So, to give away 160,000 homes, developers would have to sell almost 90,000 full-price homes. In total, they would have to build 250,000 each year.

In an insightful article, Dilip D’Souza, writing for the Outlook section in the Washington Post explains the futility of the current slum redevelopment schemes in Mumbai.

I will always welcome the transfer of public property into private hands, and even the most left-liberal activist will agree that it is more preferable to hand over property rights to the “little guy” transparently than to big evil builders after intense backroom dealings.

Gaurav Sabnis, an Indian blogger takes the argument further and advocates transferring property rights to slum dwellers thus giving them a better say in negotiations with the builders.

My uncle, a builder and developer in the Mumbai suburbs runs his construction business through the model that Dilip suggests i.e. by redeveloping properties which have surplus FSI (Floor Space Index) and effectively giving free homes to the original residents while making the profit off the additional housing units that he sells at market rate. More on the impact of that strategy for the housing condition in Mumbai later.

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