Dharavi: Developing Asia's Largest Slum

Posted: 14 Aug 2009

See all articles by Lakshmi Iyer

Lakshmi Iyer

Harvard Business School - Business, Government and the International Economy Unit

John D. Macomber

Harvard University - Business School (HBS)

Namrata Arora

Harvard Business School

Date Written: July 29, 2009

Abstract

Maharashtra state is accepting bids to redevelop Dharavi, the largest slum in Asia. A real estate developer assesses the risks and tenders a bid. The bid conditions include providing new free housing to tens of thousands of slum dwellers, which is anticipated to be paid for from the revenues from developing and selling market rate housing. While the primary concerns are cost of construction, cost of capital, and revenues from sale of units, the analysis must consider many aspects of risk including political risk, 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 to accomplish it in large chunks or in smaller increments. Additional topics that can be covered include consideration of what happens to commercial activities formerly run from slum dwellings, whether the market rate units will indeed sell for high prices if there are tens of thousands of former slum dwellers housed nearby, and whether the slum dwellers will be allowed to resell their units or whether they must remain in them. Other issues include timing of the project, guarantees to and from the government and the private parties to mitigate risk, and whether this model, if successful, can be extended to other slums in Asia.

Suggested Citation

Iyer, Lakshmi and Macomber, John D. and Arora, Namrata, Dharavi: Developing Asia's Largest Slum (July 29, 2009). HBS Case No. 710-004, Harvard Business School BGIE Unit, Available at SSRN: https://ssrn.com/abstract=1444407

Lakshmi Iyer (Contact Author)

Harvard Business School - Business, Government and the International Economy Unit ( email )

Cambridge, MA
United States

John D. Macomber

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Namrata Arora

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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