Financing Slum Redevelopment
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Financing Slum Redevelopment book
The private sector's limitations are exposed and exacerbated by the finance-intensive and property market dependent nature of the slum redevelopment strategy. First, access to development finance is a major problem. The market lacks robust institutional arrangements to finance construction. Traditionally, developers in Mumbai financed the construction of real estate projects through 'pre-sale financing'. In this established method, potential buyers, or investors, made advance payments for purchasing property. Developers used the payments to construct their projects. However, potential investors in slum redevelopment were wary of making pre-sale payments. The track record of redevelopment projects was relatively poor. Delays were a norm in most projects. Given the amount of uncertainty involved in redevelopment projects, it is understandable that potential investors were unenthusiastic. But their reluctance added to the financial problems of project developers.