There are three ways to secure "good margins" in this kind of business: You rent existing structures charging high levies. Alternatively, you demolish and build a lot more than was there previously, or thirdly you add to what is already there. Of course, combinations of the three approaches are also possible.
Which strategy is adopted depends on who owns the plot, the legal system in place and the political power of developers and their accomplices
Exploding Kariakoo
Kariakoo is in the heart of Dar es Salaam. Some 30-40 years ago this was predominantly a residential area dominated by one-storey Swahili-houses.
Today, however, only a handful of these structures remain. New glass-steel-and-concrete buildings, reaching 8-10 storeys or more high at the main thoroughfares have completely taken over.
Kariakoo is in the process of becoming one of the largest market-arenas in Africa. The total area is only approximately 1.5 km2 and it is a very busy place with a lot people, congested traffic, shops, offices, small industrial units and flats. Already in 2002 it had a daytime occupancy of more than 200 000 people while the night-time population was only 50 000. Today these figures have probably doubled.
What is behind the changes in Kariakko? The local architect Ezekiel Z. M. Moshi has studied the developments and he argues: - We are not witnessing a process driven by professional planning or design concepts. Rather it is driven by the economic interests of the owners of the plots in the area. (For more details see: PhD thesis 39, The Oslo School of Architecture and Design)
The plots in the area (generally 12 x 24 m) usually sell for between 100 million and 500 million Tanzanian Shillings (100 000 to 500 000 USD). That means maximum prices are close to 2000 USD per m2. By way of comparison some of the most attractive sea-front plots in downtown Oslo were recently sold for 4500 USD/m2.
Public land?
All land in Tanzania is in theory publicly/state owned. However, it is not only in very central areas like Kariakoo that plots are bought and sold through systems which may only be minimally influenced by official legislation.
Another example is that of Burguni Mnyamani, which was established in the early 1970s and is the oldest slum in Dar es Salaam. The district is some five kilometres from the centre. It is a 'rough and ready' place with open sewers and limited water-supplies. Schools are few and health services almost non-existent. Drugs are easily available but jobs are much scarcer.
The population is however rapidly increasing, from some 18 000 in 2005 to 21 000 in 2010. Much of this growth is caused by new immigration to the area.
Thus a process of densification has clearly begun, although it will probably not be as rapid, massive or profitable as that in Kariakoo.
In Burguni Mnyamani most houses are one storey high. Most plots are 500-600 m2, but are increasingly divided in two. The occupier of the plot usually has their house on the plot and lives in it.
By 'splitting' the owner can gain up to the equivalent of 4000 USD per part. If you sell both and leave, the money can be enough to fund a new start with better sewage, water and social facilities.
You would have to move further away from the city centre, probably at least 10-15 km. This however usually entails much longer journeys to work, and with all the traffic in the city, this could easily mean two hours more travelling each day.
Kiberia is still flat
Kiberia is the famous 2.5 m2 slum-city in the centre of the Kenyan capital. It is one of the most densely populated areas in the world. Between 600 000 and 1.2 million people live here, depending on season, jobs etc.
Kiberia is still all one-storey sheds of wood and rusting corrugated sheets, usually some 10 m2. Like a carpet the shanty structures are spreading up and down the hills in the area, while the surrounding areas are either traditional 'suburbia', industrial development areas or downtown, with a growing number of high-rise office-blocks.
Open spaces are hardly anywhere to be found in Kiberia. More than anything the reason for this is that the more houses there are the more profit there is to be made. The demand for these relatively low-cost housing units seems, so far at least, to be almost limitless.
Almost all houses are for rent. In Nairobi land is usually privately owned and very few of the Kiberia-owners themselves live in the settlement. Rather you find them in the posh villas in the green suburbs. Many of them are politicians or businessmen.
All profits after 20 months
According to UN-Habitat the rents paid here are so high that it only takes 18-20 months for the owners to recoup their initial investments. After that the plot functions more as an income-generating machine with hardly any expenses or taxes.
Average rent in the area is between 1500 and 3000 Kenyan Shillings (250 – 500 USD) per month. There are stories of people owning up to 300 houses, in other words, each month it is possible for such people to put the equivalent of 150 000 USD straight into their pockets.
Protesting upgrading
Last autumn the authorities in Kenya launched a programme to renovate Kiberia. Although it might take many years to fulfil, some say almost 1200 years, it has been met with substantial resistance from the proprietors or the structural owners, as they are called locally.
No less than 80 of them have so far protested against the upgrading-programme, claiming that the authorities do not have the right to demolish existing structures. Many of them have also announced that they are prepared to take legal action including going to the High Court (http://en.wikipedia.org)
Mumbai's expensive slum
The examples above from East-Africa are in many ways typical also of many other places in the world. Take Mumbai, here the centrally situated Dharavi is often called "the most expensive slum in the world".
The reason for this is first and foremost the high prices generated through the sale of plots in the area, again it is excellently located for property-speculators. Prices are comparable to Manhattan and ordinary flats in the new blocks rising up among from among the sheds can easily cost 90 000 USD.
- There are examples of speculators in places like Mumbai, Nairobi or Caracas, making profits of 1000%, comments Assistant Professor Bo Vagnby of the University of Ålborg (Klassekampen 02/03/10) one of the increasing number of researchers studying international urbanisation. He compares the developments here to what happened in parts of Copenhagen during the 1920s and 1930s.
Cheap labour resource
- Another economically attractive thing about these settlements are that they are actually very useful for the city's economy, because this is where the city's cheap labour and most its entrepreneurs live and often work, underlines David Satterthwaite, Senior Fellow at the International Institute of Environment and Development.
- Increasingly, moreover, close links are being forged to the formal economy actors situated in the glass towers of these cities. As such, without these shanty-towns or slums, these cities could not survive and expand, he adds.
From Kariakoo, Dar es Salaam. Photo: Odd Iglebaek
Slums of Nairobi. In both cases the economic potentials of the actual properties are decisive for the city-scapes. Photo: Odd Iglebaek
By Odd Iglebæk