When the head of Lafarge’s affordable housing initiative in India visited our small office in Dharavi — a settlement known as Mumbai’s largest slum — we had no idea it would be the beginning of an adventure leading us to break through huge economic and cultural firewalls.

We run an urban research and planning office principally concerned with questions of mobility, housing and livelihood in emerging cities. Our practice is based on the premise that end-users know what they need better than planners and experts. When it comes to innovation, our approach is to build on existing practices rather than replacing the system.

In an effort to crack the affordable housing market in India, Lafarge was talking to professionals all over the country. At the time, many giant schemes were underway. Lafarge wanted to be an actor in the affordable housing market by supplying construction materials and solutions to developers. However, the competition among material suppliers was and remains fierce with very thin margins.

While there is scope for innovation in construction practices, attempts to create affordable housing by using new products and technologies have generally failed. This is mostly because very few players are actually willing to spend time and money to understand the market they are trying to enter. Most attempts at innovating in the field are based on preconceptions of what end-users need, want and are ready to pay for.

A bias for quantitative over qualitative analysis also distorts the kind of interventions that successful innovation requires. All eyes are stuck on the following set of data:

  • Today, only 30% of India’s 1.2 billion people live in urban areas. However, the urban population is growing fast and by 2025 well over half a billion people will live in cities.
  • Currently, the government and private developers together simply cannot meet the demand for affordable housing. Depending on the income bracket, the gap between supply and demand is somewhere between 25-35% according to Jones Lang LaSalle.
  • This means that unless a new approach is found to provide affordable housing, millions of families will continue to be absorbed into slums. Since 2001 the number of people living in slums has gone from 52 million to 65 million in India. According to some, about 40 million new affordable housing units must be produced in the next decade in order to contain an explosion of slums.

 Dharavi Redevelopment

Slum redevelopment is costly both in economic and social terms. Along with their houses, people lose income opportunities. Diverse neighborhoods get replaced by monofunctional mass housing, which is often of very poor quality.

In Mumbai, the booming economic capital of India and the country’s biggest urban agglomeration with nearly 20 million people, housing issues are particularly acute. Over half the city lives in slums according to the census. Yet, in the past 20 years, only 200,000 housing units have been produced under government schemes.

Currently, market-driven affordable housing initiatives have only made a tiny dent into – what the ancient Indian ruler Ashoka called – “the top of the bottom” of the pyramid. They have managed to do that mostly by cutting through the red tape that prevents families with a steady income to access housing finance.

Other programs, such as the Slum Rehabilitation Scheme in Mumbai, give incentives to private developers to produce mass housing for slum dwellers in exchange for transferable development rights with which they can produce market-rate housing in-situ or elsewhere in the city. However, this scheme is plagued with institutional corruption, procedural delays, and perverse incentives that lead to the development of housing blocks which become vertical slums within a few years of completion.

Typically, when the government, large developers or non-profit organizations develop affordable housing, they achieve affordability by compromising on quality, hastening the construction cycle, moving to the far out periphery, and scaling up the number of units produced. This has dramatic consequences not only for the people who are resettled there (often against their will), but also for the city at large.

From an urban point of view, mass-producing low-grade housing units is a disaster. Slum clearance and in situ ‘redevelopment’ transforms mixed-use neighborhoods, which provide not only housing but also employment, into monolithic housing blocks. The residents are impoverished and add to the number of commuters in Mumbai’s jam-packed transportation networks. Many people simply cannot afford to live in high-rise buildings that are expensive to maintain and tend to decay rapidly.

More worrisome, it creates the kind of socially and economically alienating urban ghettos that many westerns cities are struggling with today – only on a much larger scale. These vertical ghettos are far more dysfunctional that the ‘slums’ they replace.

“What is to be done?” was Lafarge’s question. Our answer to Alexis de Ducla, who then headed Lafarge’s affordable housing initiative, was that he should consider the small house in which our office was located, along with all the other 57,000 houses that make Dharavi’s urban fabric as affordable housing in need of improvement, rather than as slums. The real market – and the real need – was here rather than in the next scaled-up mass housing scheme. From this point on we helped Lafarge develop what has become one of their flagship projects in India.

 

April_JSFB_Mumbai Affordable Housing in India.chartThis chart shows that most households live in structures that have not been built by large developers or by the government who typically make concrete roofs. These non-concrete roof houses are instead produced by local contractors and part of incrementally construction economy. At least half of Mumbai’s households live in houses built by local contractors – usually in settlements classified as slums by the government.

Our study of local construction techniques revealed that rather than being substandard, Mumbai’s ‘slums’ are often made of homes that are well built and even over-engineered. Contractors hired by residents to repair or rebuild their homes live in the same neighborhood and are part of the same communities. Their businesses depend on their reputation, so rather than taking the risk of building a weak house they make it ‘over solid’, using industrially produced bricks, steel and cement sold in a multitude of small construction material shops. Residents typically spend four to five times less to build a small 200 to 300 square feet house than the government spends to produce a flat with the same dimensions in mass housing schemes.

People invest in improving their homes and businesses, thereby turning slums into neighborhoods. A new home can help a family escape the poverty trap. It doesn’t only increase living standards, building an additional floor can translate into revenue generation through rentals or a new business initiative. We call neighborhoods with an internal capacity to improve themselves “homegrown,” because they are developed locally, by residents.

Together with Lafarge’s affordable housing team, we conceived a new product that would directly serve the needs of local builders: bagged concrete. Mixing concrete on site is a messy and space-consuming affair. It is difficult to accurately combine cement, sand and water, especially when it is mixed on the floor. Impurities come into the concrete and a part of the mix is wasted. Lafarge has many ready-mix concrete plants that cater to its booming real estate market. We devised ways in which high-quality, ready-mixed concrete, could be bagged in small quantities and supplied to homegrown housing markets.

Contrary to what one might have assumed, people were not demanding cheap concrete, but high-quality material that would allow them to build good, solid homes for their families and businesses. The demand in various parts of Mumbai, where we piloted the project, was immediate. The initiative is now being scaled up in Mumbai and launched in other emerging markets such as Brazil. Lafarge has good reason to hope that this could become one of its highest growth market segments – far beyond the traditional mass affordable housing market.

Competitors have been left far behind because of Lafarge’s willingness to invest in a project that challenges social preconceptions. In India, perhaps more than in other parts of the world, the cultural barriers to entry in low-income, low caste segments are real. Initially, even within Lafarge, many managers could not understand why a company with a global reputation, active in high-end housing and infrastructure markets, would want to deal with slums.

Now everyone understands that the homegrown market is here to stay. According to Cities Alliance, which works to reduce poverty through sustainable development, 20% to 70% of urbanization in emerging cities is incremental rather than part of a master plan. The best way to deal with it is to accept it – and help local actors do what they have always been doing: improving their conditions.

Matias Echanove and Rahul Srivastava run the Institute of Urbanology and urbz.net in Mumbai and Sao Paulo. Their work focuses on urbanization, collaborative planning and design. Echanove studied government and economics at the London School of Economics, urban planning at Columbia University, and urban information systems at the University of Tokyo. Srivastava studied social and urban anthropology in Mumbai, Delhi and Cambridge (UK).