The global shift from rural to urban living will be the most important demographic transformation of the 21st century. All great shifts create the opportunity for great fortunes, especially for those with audacious visions who are positioned to capitalize on them. Indian industrialist Ajit Gulabchand runs Hindustan Construction Company (HCC), which is responsible for some of the country’s most iconic infrastructure projects. In what might be the single biggest bet in the history of Indian real estate, Gulabchand has staked HCC’s future – and his own family fortune – on a cluster of five planned cities perched along artificial fjords about four hours east of Mumbai. He calls it Lavasa.
300 million people are projected to move into India’s already overcrowded cities over the next quarter-century. Lavasa is Gulabchand’s US$6 billion dollar attempt to capitalize on this demographic shift – and turn a profit in the process. He even modeled Dasve, the first of Lavasa’s five cities, after Portofino on the Italian Riviera. Lavasa’s sales team speaks of a “stirring adventure”, complete with French lessons and rock climbing, for the 300,000 residents that it hopes to attract. With Indian cities feeling increasingly like pressure cookers, Lavasa’s promise of clean air, sidewalks, and personal space attracted huge investments.
But the setbacks have piled up ever since the project broke ground in 2007. Settling complex legal claims over environmental abuses and villager displacement has delayed progress by years. Jilted early investors share their stories on blogs with titles like “Lavasa is the Highway to Hell.” Blueprints for the other four cities have remained on the drawing board for half a decade. And the mood at Lavasa headquarters is one of confusion. Following the lead of award-winning American economists and foreign investment houses, they are trying to solve one of the developing world’s biggest challenges by creating a model for a new urban future. How could anyone object?
Understanding the skepticism surrounding Lavasa requires understanding the dueling narratives of the city. Western reporters have portrayed it as a kind of Stepford-Wives-meets-Truman-Show-in-Asia style oddity, emphasizing the sheer incongruity of replicating an upscale Mediterranean fishing village in the middle of poverty-stricken rural India. Even though Lavasa has won numerous urban planning and design awards, and drawn foreign investors like Oxford University, Manchester City Football Club, and Sir Nick Faldo, it is still hard to fit the place into old-school perceptions of what constitutes the “real” India. In Western eyes, Lavasa is as a visionary, quixotic gem doomed by ill-conceived placement and calamitous execution.
Within India, the reverse is true. Lavasa is seen as the clearest symbol yet of a new and inherently unequal urban model: one where the rich can buy their way out of the worsening pollution, corruption, and congestion that everyone else must suffer through. Clean, green, “smart” cities with drinkable tap water and 24-hour power are an unattainable dream for nearly all urban Indians.
Human rights and development activists in the nearby cities of Pune and Mumbai are fiercely opposed to the creation of a city that extracts the rich from Indian society into a European vision of prosperity.
For all the controversy surrounding its existence, Dasve is a quiet town. A smattering of Indian upper-middle class couples, university students, and city garbage collectors amble along the spotless promenade. All eight restaurants are owned and operated by Lavasa corporate partners. There are only four boutiques for shopping, which are usually closed. “No swimming” warnings ring the lake. The golf course still has not broken ground, and other big-ticket attractions are years from completion. The crowd starts dispersing from the Vegas-style water lightshow before the grand finale; few stay for the 9 PM rerun.
Lavasa straddles the line between public and private. For instance, it is in charge of its own sanitation and tax collection, but relies on the Indian government for policing and judicial services. According to financial analyst and Dasve homeowner Saurabh Jaiswal, the private connection means that once projects like Lavasa get started, they carry a certain air of inevitability. “When financial investments worth millions of dollars are made, the people behind the project ensure that it doesn’t get hampered.” The 38-year-old Saurabh and his wife Amrita bought a villa here in 2007 as a retreat home, expecting their US$140,000 investment to double within ten years.
Would they move here permanently? “Absolutely not!” says Amrita. “This place isn’t developed at all. It lacks daily services like schools, hospitals, markets. It is a dead city by night. It’s for the sake of our kids that we come here.” Saurabh admits that even though the spaciousness is attractive, “without availability of basic necessities of a city, it’s extremely difficult to manage life in such seclusion.”
It is little wonder that few are courageous enough to move here. Despite a half million annual visitors and thousands of completed villas, only 100 families have relocated to Lavasa, most in the hospitality industry. Most buyers are like Saurabh and Amrita – property speculators who see it as just another investment, not prospecting homesteaders looking to build a community. Stuck as a destination without attractions and a city without citizens, HCC has doubled down on new construction. Lavasa’s second city of Mugaon has just broken ground around the corner from Dasve, hoping to launch as an “Edutainment City” in 2017 with a Bollywood Theme Park, medical research center, and NASA-themed Space Camp.
For now, Mugaon is still tin shacks and cinder blocks. But these hills were not always vacant. Indigenous populations dotted Lavasa’s valleys before Gulabchand came, and activists have accused HCC of using political connections to acquire protected lands.
Amidst claims that the 23,000 acre megaproject – the largest of its kind in India – is simply a gigantic land grab, HCC highlights the fact that they have negotiated over 1,500 land deals and still only own 85 percent of the land. The pockets of holdouts have created a Swiss-cheese city map as residents and HCC wrangle over ownership of the last few ramshackle houses surrounded by construction pits.
Shivaji (name changed) regrets giving up too soon. The fifty-something farmer tilled his family’s 40 acres of land for three decades before he sold it for about US$40 per acre to a real estate agent subcontracted by HCC to buy up property. The agent gave Shivaji and his fellow farmers the impression that the land would be bought purely for tax rebate purposes, and that they would be allowed to keep farming as long as they wished. With electricity, roads or water for half of each year due to poor existing infrastructure worsened by the annual monsoon, Shivaji grabbed the opportunity.
Instead, HCC relocated them to a nearby village. Shivaji has access to electricity and water now, but the loss of his ancestral land haunts him deeply. “Not a day goes by that I haven’t felt bad about losing my land and being stuck in a flat. But we…can’t do anything, the game is played at a bigger level.” Shivaji now works as a gardener for HCC – the only employer in the area. “Those who were left behind like us have become slaves at the mercy of a huge company that will keep devouring villages to create cities like this.”
Rambhai Akhade held out for something better. Akhade and his family are also original residents of Dasve, and sold half their land to HCC to pay to build a small corner store on the other half. When we spoke, his son was busy writing down orders from the HCC workers that throng his shop, a typical Indian village grocery that stands out in stark contrast to the manufactured luxury just across the road.
However, Akhade says that HCC craves the rest of the land. “They came to me a lot of times. Sometimes spoke to me nicely, sometimes threatened me and sometimes tried reasoning with me” to leave before he was the last one left in the village. “Once they had come with two to three goons to ‘reason’ with me, but I with my sons and my brothers, stood my ground that I will not sell my second piece of land.” When the Sunday Times in London reported on similar allegations of coercion five years ago, HCC sued. The parties settled out of court.
Others affiliated with the project have happier stories to share. Many villagers supported Lavasa during high court wrangling with the Environment Ministry in 2010, citing improved education, health services, and job opportunities. Lavasa’s 5000 construction workers, housed in temporary colonies just down the hill from Mugaon’s planned MGM Theme Park, also have positive attitudes towards the project. Recruited from subcontractors across India, they earn about US$8 a day, 50 percent more than comparable work elsewhere.
West Bengal native Abdul Latif is one such worker. Before starting his 12 hour shift, Latif gave high praise for the shelter that Lavasa provided and the beauty of the valleys. Does it concern him that they are destroying the countryside to make way for villas? “Frankly I don’t bother with all this. We are laborers – breaking and making is our work. The whole world was full of hills once upon a time but we created space. The same is happening right now.”
Latif’s comments speak to the broader importance of political entrepreneurship in India’s urbanization process. As creating new cities carries much more profit potential than refurbishing old ones, the business of building cities feels like a gold rush. Hundreds of billions of dollars are being spent to attract millions of newly upper-middle class families to work in the office parks and live in the high-rise cul-de-sacs along strategic business corridors around and between Delhi and Mumbai. Lavasa is merely one of these efforts, albeit the most grandiose.
Nearly all projects have deep political ties too. The family of Agriculture Minister Sharad Pawar owned a 20 percent stake in Lavasa shortly after its inception, and Pawar is still hounded with corruption inquiries related to the project. Some benefits do accrue to the residents and workers of the hundreds of new-build private cities. But by the time the mayor cuts the ribbon, most of the real money has already been made by the politicians and industrialists who have enriched themselves or their proxies through real estate sales. There is also little incentive for developers to stick around, and thus, the sale of the last lot functions as a signal to move on to the next project.
Even Akhade and Shivaji understand the paradox of trying to reconcile their anger against a project that has fattened their pocketbooks. They’re bitter toward HCC for what they see as sly and heavy-handed tactics, yet reliant on that same company for their livelihood today. Feelings of regret, gratitude, and hatred all blend together. Shivaji’s friend Mahadev has a more karmic take: “What’s done is done, we can’t change it anymore. I feel bad that my land has gone, but to begin with I didn’t have a lot. At least my future generation will learn English and go settle in cities like these.”
Back at the Dasve waterfront, City Manager Scot Wrighton explains why Lavasa was conceived. “Indian cities are unmitigated disasters. We came up with a model for how to make cities better – one that can be replicated 100 times over.” Wrighton is a passionate Chicagoan headhunted by HCC in 2008 to implement Gulabchand’s vision, and carries enviable power in a country where mayors remain notoriously weak. India relies on archaic colonial-era approaches to city governance, and decentralization attempts are often undermined by bureaucratic provincialism. Perhaps because of this, Wrighton’s deputy Satish Kamat claims that “Lavasa is already in the top 10 percent of Indian cities.” For both, dealing with bureaucrats is a constant challenge. “Teaching Indians the value of autonomous government?” Wrighton asked rhetorically. “I might as well talk in Swahili.”
HCC has tried to counteract inefficient Indian city governance by turning to the New Urbanism wave of planning for inspiration. Drawing on Jane Jacobs’ pioneering ideas about dynamic, inclusive city life, New Urbanism is said to champion the creation of diverse, walkable neighborhoods where mixed-income living and residential and commercial areas intermingle. Concepts like “live-work-play” and “sustainable mixed-use” have become staple phrases of the global planned city scene, including in Lavasa.
While Jacobs called for creating conditions that allow organic, open, and authentic communities to gradually emerge, New Urbanism as a philosophy often tends to deliver pre-fabricated, synthetic spaces, and attract primarily upper-middle class residents. Despite promises that it will be home to people across socio-economic lines, Lavasa’s biggest barrier to an inclusive community have not been bureaucratic decrees, but investor mentality. “We’re finding out how far you can push the envelope of egalitarianism,” Wrighton said. When they started selling Dasve homes, “we tried to build our low-income housing next to the villas (for community integration), but buyers told us they would not live next door to their drivers.”
Lavasa is just one of over a thousand planned cities around the world, and it is often these unexpected roadblocks that cut the sharpest. Henry Ford lost the present-day equivalent of US$200 million in the 1920s in building Fordlandia in the 1920s, a failed rubber city in the Brazilian Amazon that was sunk by production shortages and revolts over bans on alcohol, women and tobacco. 21st century Chinese ghost cities like Ordos carry a disturbing post-apocalyptic vibe as they await their promised residents. Yet cities like Washington DC and Canberra are masterpieces of urban planning. The world’s largest planned city, Navi Mumbai, is just a couple of hours drive from Lavasa.
Perhaps the biggest contradiction about planned cities is that it is not until they have the problems of cities that people take them seriously as cities. Lavasa’s closest parallel might be found in Walt Disney’s planned community of Celebration, Florida. Celebration was ridiculed for a decade after its construction in 1997, then mostly forgotten until its first murder in 2010 provided a morbid coming-of-age. For his part, Gulabchand said in 2011 that the presence of not murderers but prostitutes will mean that Lavasa has truly made it. Wrighton bristles at the line, but until Lavasa becomes more than a quaint novelty, few will take it seriously as a blueprint for addressing challenges of urbanization.
All of this begs the questions: how do we make our cities better, and how can we make better cities – especially in developing countries with rapidly growing cities that need them the most? New York University’s Paul Romer believes that city start-ups hold the answer.
Taking cues from his previous successes in Silicon Valley, Romer argues with Brandon Fuller in a 2014 paper that public-private planned cities will help citizens “escape from rules that hold the society (sic) back.”
According to the pair, hundreds of new cities in the developing world should be built with the authority to reject local laws and regulations, replaced with “new political entities (who) try different types of rules and subject them to a market test based on the decision to opt in.”
The idea parallels a new generation of planned cities in the global South, with western governments and foreign developers envisioning cities as equal parts I.P.O. and governance laboratory. For instance, Romer’s Charter Cities initiative attempted to harness new technologies of governance as he spearheaded similar foreign government-supported projects in Madagascar and Honduras, drawing interest from Whole Foods CEO John Mackey and venture capitalist Peter Theil, among others. And actors like Russia’s Renaissance Capital are investing billions across Africa in evocatively titled private cities like King City in Ghana, Kiswishi (translation “there is wealth”) in Congo, and Roma Park in Zambia. Like Lavasa, these cities are semi-gated communities targeting the well-heeled, trying new governance modalities to replace local weaknesses.
There is a lean, Darwinian appeal to “let them try, let them fail” approaches, and actively trying to solve a vexing, complex and growing problem is laudable. But the approach hinges on selling escapism as a solution instead of improving existing urban realities. By believing that we can simply import an idealistic technocratic model into an artificial institutional context, these projects also flout what the past half century of development economics has taught us: that it is incredibly difficult to get institutions right, and where we get them right it takes a very long time.
Botching new cities also cuts deeper than when a new app fails to catch on. Living by his ‘fail fast’ mantra and Silicon Valley’s never-look-back ethos, Romer gave up in Madagascar when the government changed, and bailed out of Honduras when the project ran into resistance as critics blasted both as little more than wide-eyed neo-colonialism. While Romer’s misadventures and the vacant streets of Ordos might not make for the dystopian nightmare-scapes of urban theorist Mike Davis’ ‘Planet of Slums’, trial and error approaches to development must acknowledge the broader human implications of a flop. ‘Fail fast’ provides little consolation for the millions of globally displaced like Shivaji who sacrifice their land at cut-rate prices or local investors like Saurabh who are persuaded by slick sales pitches to invest their life savings in boom towns that go bust.
Claims like Romer’s imply that the benefits of new public-private cities will trickle down, but these successes may just as easily erode the tax bases and political legitimacy of the fragile countries that host them.
In an email interview, Columbia University’s Saskia Sassen argues that a new urbanism cannot rely on private settlements alone. The privatization of governance in Lavasa and other new planned cities represents “just one instance of the making of ‘governance instruments’ that really are about protecting privilege and upper sectors of our societies and economies,” not improving society. “Not all governance is good governance if the concern is to ensure a robust democracy.”
Employing the latent power of existing cities is a powerful tool. Several successes in Latin America illustrate how we can better run previously “ungovernable” urban spaces. Through a mix of visionary politics and commitments to improving social capital, Bogotá in Colombia has been reborn from one of the most corrupt, chaotic, and dangerous cities in the world to a model of urban governance. Recife in Northeast Brazil has halved its record homicide rates in the past decade through innovative public security policies that have been lauded by the UN. Also in Brazil, Curitiba’s focus on urban planning has created accessible, efficient public transport systems, and integrated compact housing with extensive green spaces. Common denominators for success are political will and creative approaches to improving existing conditions, not trying to start from scratch.
The hills of rural India seem a strange place to stake claims over what the cities of the next century should look like. But as politicians and other vested interests push the Lavasa vision forward despite its stumbles, it might be ultimately viewed as a case study for how publics get the cities they deserve – in India and across the developing world.
As for-profit cities siphon away those who opt-out from existing urban centers, the former become beholden to corporate stewardship while the latter crumble and choke from political neglect. While it is unclear exactly what an urban India stripped of its increasingly politically active upper-middle class would look like, it almost certainly will not be anyone’s version of utopia.
In the meantime, HCC has fallen on hard times. Lavasa drained the company of its free cash flow, HCC stock has plummeted 95 percent from its 2007 peak, and the company’s total market capitalization is now less than one-twentieth of the cost of the Lavasa project alone. Bankruptcy and hostile takeover rumors ominously circle in the Mumbai financial broadsheets. None of the big foreign investors have moved beyond their paper commitments; Oxford has pulled out, and a Faldo spokesperson notes that “there are no updates on progress. All is quiet.”
While India escaped the brunt of the global financial crisis, its current slowdown could end Gulabchand’s dream even if Prime Minister candidate and Gulabchand friend Narendra Modi wins India’s May elections and funds his promised 100 new cities across the country. Two decades of economic expansion puffed up Gulabchand’s triumphs as befitting the “next Richard Branson.” His fate may lie closer to that of fellow silver fox and Mumbai resident Vijay Mallya, whose own attempt as Kingfisher CEO to emulate the high-flying, big-dreaming Brit ended in a bust airline and a family company lost to creditors and the courts.
Until that day comes, Lavasa’s employees will try to bring their chairman’s dream to fruition. As the ever-optimistic Kamat promises, “Nick Faldo might be (dead) by then, but we’ll keep working on it.
Sangeeta Rane contributed reporting.