T his paper analyzes real estate market dynamics over the past decade in the city of Ahmedabad, India, with a view to improving the living conditions of the large population living in slums. The paper combines census data, the National Sample Survey, and slum household surveys to review the demand side of the market. Satellite photography was used to estimate the production of both formal and informal housing over the past ten years. Analysis of the execution of the development plan for the Ahmedabad region and town planning schemes shows how the system of housing supply has evolved. These analyses are used to assess the feasibility of various approaches to achieving “slum free” cities, the goal of the Government of India’s planned assistance program Rajiv Awas Yojana. The paper concludes that notwithstanding a substantial increase in public housing production in recent years, providing subsidized formal homes from the government or through reservations for lower income groups in private developments would take more than a generation just to handle the current slum population representing one-third of households.

To provide basic environmental infrastructure services in existing underserved neighborhoods a proven approach under the Slum Networking Program and bolstering infrastructure networks for the city to accommodate increased demand are affordable and feasible. Addressing issues such as rural-urban land conversion and ambiguous land tenure, and allowing flexibility for realistic building standards and increasing maximum floor space standards in certain neighborhoods can help to ensure a growing supply of housing that is affordable for moderate and low-income households. Ahmedabad is a fast growing city in one of India’s most dynamic and rapidly urbanizing states. Table II.1 shows that Gujarat, at 42.6 percent is well over the all-India urbanization average of 31.2 percent as measured in the 2011 Census. Likewise the speed at which urbanization in Gujarat is taking place is considerably more rapid than in all of India, which changed less than 2 percentage points over ten years. The average annual growth rate of urban population in Gujarat for the next 15 years has been forecast at 2.9 percent3, indicating continued high urban population growth in the state for an extended period.

As is commonly the case, Ahmedabad, the largest city in the state, has been growing more slowly than the total urban population of the state. It is also important to note that while population growth rates in both the AMC and the urban areas of Gujarat rose in the recent census, they are considerably lower than in the 1970s. These healthy growth rates and the relatively youthful age profile of the population clearly imply that household formation in the AMC—not currently measured at the corporation or urban agglomeration area—are likely to be buoyant and will require a substantial supply response to avoid major real estate price increases. However, rising prices and continuing large shares of the population in slums are not the result of out-of-control urbanization.