Abhishek Kapoor, a partner at Neumec Group, a Mumbai-based developer, talks about slum rehabilitation.
How did you get into slum rehabilitation?
The scheme was started by the government of Maharashtra. They could not do this slum removal from the city of Mumbai on their own. So they decided to float a scheme to involve private individuals and parties to support them and work towards clearing slums from Mumbai. Before that we were just doing normal real estate and land, normal development. We started studying it and some of the projects to understand how it operationally works. Of course, in the initial years there were a lot of teething problems in terms of understanding the scheme itself and how it would work, vacating the sites. We started doing slum projects in the late ‘90s.
How do developers raise the finance to actually build these projects?
That’s a big challenge. Slum land is not easily financed by the banks because the title to the land is with the government. They believe that is a risky propositions until such time that you are able to clear the land, so the banks do not finance it. But of course a lot of non-banking financial companies are financing it. There’s private equity you can take. There are high net-worth individuals that invest in these projects.
Do you find that the homes for sale are easy to sell and are the prices in line with regular projects?
I wouldn’t say that it’s in line with a normal project but people are recognising it now. Some people don’t want to live next to a rehab building. Both the buildings are developed on the same plot. As the market has matured, people have started accepting it.
There has been some criticism of the slum rehabilitation scheme. Do you think it has not achieved what it set out to achieve?
A significant policy like this takes time to deliver results. With a democracy like in India – you’re not in China where you can steamroll everything and anything. When you’re in a democracy you’re dealing with people’s rights. We can’t just take away people’s homes and build a road and the development plan of Bombay cannot be implemented unless these slums are removed. I think it has been fairly successful and I think with the amount of clarity now that exists in slum rehabilitation, it will only get better. I wouldn’t say everything is 100 per cent successful. If that was the case there wouldn’t be any slum formation in Bombay and slum growth is still a challenge.
business@thenational.ae
Follow The National's Business section on Twitter