Dharavi, one of the largest slums in Asia, is now the subject of a Harvard Business School case study, which examines the efforts and risks involved in redeveloping the shanty town in Mumbai into an urban locality.
The 25-page case study titled 'Dharavi: Developing Asia’s Largest Slum', details the history of Dharavi and examines ongoing efforts to forge a public-private partnership between the state government and for-profit developers to transform the slum into a neighbourhood with residences, improved services and economic opportunities.
The study by HBS assistant professor Lakshmi Iyer, lecturer John Macomber and research associate at the HBS India Research Center Namrata Arora, considers the potential risks and rewards of approaching an area like Dharavi with a new model — "slums as lucrative and socially entrepreneurial business opportunities".
"The basic idea is that the slum dwellers are living on very valuable land in one or two storey shacks. If you build multi-storey buildings, you can give them accommodation and still have space to sell so that it will be a for-profit project," Iyer said.
Dharavi is home to an estimated 7 lakh people living on just 551 acres.
It embodies the characteristics of a slum as defined by the United Nations: inadequate access to safe water and sanitation, poorly built housing, overcrowding and insecure residential status, associate editor of the HBS Alumni Bulletin Julia Hanna said in a report.
The case opens with a fictitious developer, Rance Hollen weighing the cost of capital, construction and expected market prices for developed units in the slum.
It examines concerns like cost of construction, cost of capital, revenues from sale of units as well as political risks, foreign exchange risk, market risk and execution risk.
Further, the discussion covers social aspects including whether the slum should be redeveloped at all, whether it should be redeveloped by government or by the private sector and whether the redevelopment should happen in large chunks or in smaller increments.
Other issues include timing of the project and whether this model, if successful, can be extended to other slums in Asia.