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Samir Mohammed Moda, 32, was born and raised in Dharavi and runs a cellphone repair and service centre. He is standing in front of his 175-square-foot house. (Priyam Dhar/Priyam Dhar)
Samir Mohammed Moda, 32, was born and raised in Dharavi and runs a cellphone repair and service centre. He is standing in front of his 175-square-foot house. (Priyam Dhar/Priyam Dhar)

Stephanie Nolen

Two-room shack, Mumbai slum. Asking price: $43,000 Add to ...

No. 372 Bagicha Compound is two rooms of eight feet by eight feet stacked one atop the other with only a rickety ladder outside leading to the low-ceilinged upper floor. It has no plumbing of any kind, one small window on each floor, and sits on a tiny, stinking courtyard thick with children and goats off an alley off an alley in one of the biggest, most overcrowded and impoverished slums in the world.

It is nevertheless listed for sale for a cool 2.2-million Indian rupees – about $43,000 (Canadian). The real estate agent handling its sale, Tausif Chudesara, reports happily that the Dharavi shack may even sell above that asking price.

If this seems, shall we say, bonkers, welcome to the world of Mumbai real estate. With an estimated 21 million people crammed on a scattering of islands and nowhere left to grow, housing and land prices in this city are staggering.

Nowhere is this more striking than Dharavi, the vast sprawling shantytown made famous by the film Slumdog Millionaire, that sits at the heart of the city. Its streams of raw sewage and scrap-heap houses are crammed onto some of the most valuable land in the world. And everyone wants a piece of it.

Prices have been monstrously high in “proper” neighbourhoods for years. A three-bedroom apartment in a genteel area of South Mumbai can rent for $6,000 a month. Should you wish to buy in one of the colonial-era apartment buildings or one of the shiny new towers that spring up in their place, you will be lucky to get in the door for under a million bucks.

It took some time for that market to bubble over into the slums, but today prices for tenement rooms and scrap-metal shacks are rising fast. “Prices have gone up so much in the five years since I got into this business that you wouldn’t even believe it,” said Mr. Chudesara. “A shack I used to sell for 400,000 is now 2.5-[million rupees]”

Developers have been eyeing Dharavi for years, hoping either that the city would mass-relocate its low-income residents and open up the prime land for redevelopment, or that they could acquire enough plots piecemeal to be able to create islands of high-income property around the slum. Every Dharavi resident has a story about the neighbours who were offered an astronomical sum for their land by speculators.

Meanwhile the Mumbai government has pledged to redevelop the slum, maintaining most of it as a low-income neighbourhood but one with services such as sewage and piped water, and buildings that meet safety codes. That has also driven prices up. Although only residents who have lived in Dharavi prior to 2000 are technically eligible for new housing, there is a perceived immense value in being in situ when the makeover comes.

That project has been stalled by bureaucracy, corruption and poor planning for more than eight years. But in January, the government said that all housing dating back to 1995 would be “regularized,” meaning people would be given title documents, and so sparked a new wave of hope for improvement, said Jochim Arputham, president of the National Slum Dwellers Federation. “All kind of speculation has stopped because people are very confident there is going to be some change, they are going to get housing.”

Mohan Shinde moved to Dharavi 40 years ago from a village in the south of Maharashtra; he and other new arrivals reclaimed the land they live on from a tidal channel, filling it in with bags of dirt and debris. He built a tiny house of bamboo – at a total cost if about $10 in today’s rupee – which over the years he has upgraded to a two-story cement building. Current value: approximately 1.5-million rupees, or $30,000.

“We’d never think of leaving, because it’s an amazing place almost in the middle of the city,” said Mr. Shinde, who is a building contractor. “The problem is, it’s a slum.”

The government has promised redevelopment for as long as he’s lived there, he added. He’s not holding his breath.

Many residents of Dharavi are left in the bizarre situation of living in a $50,000 shack. They can’t sell, and use the money for education or starting a business, because then they will have no way of buying back into the market, explained Mr. Arputham.

Mr. Shinde said he would love to shift his family to one of the small flats he fixes during his workday, but even if he sold his Dharavi house for 1.5-million rupees – a figure he could never have dreamed of when he was hauling dirt to create the land it’s on – it would cost him 5 million, at minimum, to get a one-room flat outside the slum. “Where,” he asked, “will we get that money?”

Mr. Chudesara said the majority of clients he deals with are reluctantly selling their property because they have lived in Dharavi for a generation and outgrown it now that the children have children of their own – the family divides up the sale price – or because of an emergency need for cash for things like health care bills or a dowry. But once they sell, he explained, they have to relocate to a slum that is 60 kilometres away, on the far reaches of the city, and that’s deadly for employment prospects.

The owner of 372 Bagicha Compound, the two-room shack on the alley off an alley, is Samir Mohammed Modan, proprietor of a thriving cellphone business in Dharavi. He bought the house for 14,000 rupees in 1981, and as you might intuit, he is quite pleased at the idea he’ll get 2.5-million rupees when he sells.

Mr. Modan said he going to put that money right back into the real estate market, buying another two-room dwelling. But this one is on a wider alley, has multiple windows, and a water standpipe out front. He expects to pay 35-million rupees for it, about $69,000. “It’s a really good deal,” he said.

Editor’s Note: No. 372 Bagicha Compound is two rooms of eight feet by eight feet stacked one atop the other. The dimensions were incorrectly expressed in an earlier online version and the original newspaper version of this story. This version has been corrected.

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