With the slowdown in the real estate sector threatening to hurt the redevelopment of India’s largest slum – Dharavi - the government is considering the option of foreign direct investment (FDI) to make the project more lucrative.
In a meeting of Committee of Secretaries (COS) held on Saturday, it was decided the state finance department would examine if FDI can be allowed in the project, with the Centre likely to approve the move.
Though the Dharavi Redevelopment Authority (DRA) is awaiting a final nod from the state to start the project, senior officials are jittery, considering the recession in the realty sector. The DRA has decided to issue tenders for the revamp of four sectors simultaneously, with strict financial and technical norms for the builders.
“The winning bidder needs to invest at least Rs 5,000 crore for each sector, as apart from constructing houses, he has to create an entire new infrastructure in his area. The feedback we are getting is not encouraging,” said an official.
“The liquidity condition is tight, especially in the realty sector. It will really be a challenge to get bidders for the Dharavi revamp project, since it is shrouded in uncertainties,” said Sunil Mantri, president, National Real Estate Development Council.
The DRA has made it mandatory for winning bidders to rehabilitate all slum dwellers within seven years of issuing work orders. “This means it will take more than a decade before the builder can start recovering money through sale of apartments, after rehabilitating the original occupants,” said the official.
A leading builder who had bid last time said: “Even after investing so much money, we are not sure of when the slum dwellers will vacate. Any delays will affect us financially. Also, there is still not a clear policy with regards to commercial structures, which form a backbone of the place.”
Though the DRA has prepared the final plan, there is also a tussle within the ruling alliance about the revamp. While the BJP wants to give 400-square feet houses with 100 square feet area extra, with the extra area to be paid for by slum dwellers, the Shiv Sena wants 450-square feet houses free of cost.
Dharavi residents said the uncertainty has made life difficult. “Our redevelopment is stuck from the last 11 years. We are tired and just want to get decent homes,” said Raju Kode, president, Dharavi Nagrik Manch.