The Sunday rituals in Rio de Janeiro are clearly defined: Pray for sun and go to the beach. Dust off your bicycle and cruise around the Aterro do Flamengo, an elegantly landscaped park along Guanabara Bay. Go to a samba school for feijoada, the simmering stew of beans and animal parts you’d rather not think about, and dance it off to the pounding drums in the run up to Carnaval. Plunk yourself down in a plastic chair at a bar and order a cold chopp in time for the six o’clock start of the evening’s soccer games. Above all, don’t work.

That is, unless you’re one of the women clad in green spandex and white baseball hats endlessly waving flags in figure-eight loops in front of an empty lot. While the effect is Formula 1 finish line, the street is dead and the shops are shuttered. The women are instead steering potential customers to the makeshift sales booth that will soon be home to Vogue, a 14-story residential condominium. Located on Rua São João Batista in the Rio neighborhood of Botafogo, Vogue’s three- and four-bedroom condos are priced at R$900,000 (nearly $500,000 USD) or more and come replete with the conveniences of a gym, sauna, playroom, party room, a 10-foot fence surrounding the building and 24-hour security. Welcome to the new Brazilian dream.

“In Rio, besides taking over new parcels of land, the revitalization process is marked by demolitions.”

In the Rio de Janeiro of 2012, “the marvelous city” has become the superlative city with real estate prices reaching their highest point ever. Created by a confluence of lucrative offshore oil discoveries, a surging GDP and policies spurred by the 2014 World Cup, 2016 Olympic Games and Rio+20 Earth Summit later this year, this real estate boom has upended the city’s status quo.

Massive investments in transportation infrastructure, like a long overdue subway expansion and 100 kilometers of bus rapid transit, are remaking the city as it readies for the world stage.

Moreover, an ambitious, citywide upgrading program has employed a number of tactics to urbanize Rio’s informal settlements, known as favelas. The program, dubbed Morar Carioca — the phrase roughly means “Living like a Carioca,” i.e. a Rio local — has a key tool at its disposal: Unidades de Polícia Pacificadora, or Police Pacifying Units (known to everyone in Rio as UPP). Characterized by police invasions and permanent occupations of the notorious favelas, UPP has created an immediate impact in surrounding neighborhoods by raising property values and encouraging development in areas that previously were seen as too dangerous for investment.

Vogue is just one of the physical manifestations of this upheaval. It will tower in the middle of its block and loom over a largely residential side street where no building exceeds four stories. Unlike the tony streetscapes of Ipanema and Leblon — Rio’s most prestigious residential neighborhoods, whose buildings Vogue strives to emulate — it will join the ranks of two auto body repair shops, a locksmith, a couple of corner bars, a lottery outlet, a garage where vendors store corn-on-the-cob carts and several vilas, adjoining houses that face a common alleyway behind a gate to the street. It is hardly a block that could be considered “in vogue” — just an unassuming stretch of asphalt populated by the quotidian variety of urban life. A little scruffy around the edges, some attractive old facades that could use a sprucing up, but mostly harmless and close to the subway.

Botafogo is just one neighborhood undergoing a rapid transformation, with one of the last remaining patches of low-rise housing in such a centrally located part of Rio quickly going vertical, as charming if occasionally rundown early- and mid-20th century vilas sprout boxy high-rises with fashionable foreign names. The speculative boom prompted Paulo Thiago de Mello of the Federal University of Rio de Janeiro to compare Botafogo to the recently gentrified Aligre neighborhood in Paris.

“In Rio, besides taking over new parcels of land, the revitalization process is marked by demolitions,” said de Mello, “whereas in Paris they preserve the urban fabric. Already the vila houses and small apartment buildings are starting to disappear in favor of closed condominiums, with leisure and security amenities that guarantee the exclusivity sought after by new residents.” The increase has been dramatic: The median rent for a one-bedroom apartment in Botafogo doubled from R$750 ($400 USD) in 2009 to R$1,500 ($800 USD) in 2010.

Real estate magnates are snatching up every square centimeter of developable land in the Zona Sul — the South Zone, a small but desirable stretch of the Brazilian mega-city that runs from the postcard beachfronts of Ipanema and Copacabana to downtown, wedged between the Guanabara Bay and the rainforest-carpeted mountains of the Tijuca Natonal Park. Every Sunday, O Globo newspaper’s real estate section attests to an upward spiral of housing prices. One week the section covered the beachfront condo unit in Leblon that fetched R$32 million. Another story reported on places in Rio where the prices per square meter are higher than Manhattan or Monaco. For Brazilians accustomed to looking at the United States as the bastion of wealth and luxury, especially when the not-so-distant past of the 1990s saw Brazil crippled by double-digit inflation that rendered assets worthless, it is a strange turn of events.

As Vivienne Boveiro, a hotel executive, recounted, “When I heard a friend at the gym casually contemplating whether she and her husband should buy a condo in Miami or Madrid, I just shook my head with disbelief.”

As the elite live through a flush time propelling Brazil into a bright economic future, the poor, especially those who live in favelas, are at an uncertain crossroads to be defined by forces well beyond their control. With the South African World Cup and Beijing Olympics as precedent, the international community is increasingly willing to award major world events to cities in emerging countries. Now it is Brazil’s chance to see if it will treat favelas any better than Beijing’s hutong or South African townships. But favelas’ notoriety as havens for the international drug and arms trades makes them a particularly thorny feature of the urban landscape in Rio. While Rio’s government has been lauded for taking a tough stance on crime, the pacification process’s unintended consequence of greater inequality is cause for concern.

Rio’s allure to tourists and locals alike is, ultimately, a thin veneer as the carefully manicured image yields to the reality of nightmarish traffic, polluted waterways, overtaxed infrastructure and bureaucratic morass. Christopher Gaffney, visiting professor of urbanism at the Federal Fluminense University, puts it bluntly:

“Living in Rio is like dating a supermodel. She’s staggeringly beautiful, but then you remember she’s anorexic and has a vicious cocaine addiction.”

Pacification Marches Up The Hill

About five blocks from Rua São João Batista, you’ll arrive at the hill known as Dona Marta. Hills, as any visitor to Rio knows, are most often home to favelas ringed by tropical rainforest. Their dense patchwork of corrugated roofs and exposed brick has enough of a picturesque quality from a distance that they have become part of the Rio aesthetic. Santa Marta, as the community on the hillside is known, is home to about 8,000 people. A decade ago, it was infamous as the fortress of a ruthless drug lord, profiled in the bestselling book Abusado (Abused) by Caco Barcellos. Four years ago, it became the unexpected genesis of an urban security policy that is at the core of Rio’s ongoing transformation.

In 2008, the narco-traffickers that ran Dona Marta, where the police dared not tread, had taken over a state-funded preschool. Community leaders complained to the police, who resolved to at least liberate the facility. They did so, and in the heat of the invasion found themselves unexpectedly able to take over the entire favela. However, instead of making a Sisyphean retreat back down the hill and letting the situation revert to the status quo — as was usually the case with incursions into favelas — they stayed. Coronel Robson, commander of the UPP, attributes this remarkable turn of events to the gumption of Major Pricilla de Oliveira Azevedo, who led the local police unit.

“She is like a supercop, incredible stories. She was once kidnapped and stuffed into a trunk, then freed and jumped out of the moving car,” Robson marveled at a June training session for public servants where he recounted the origin story of the UPP.

The concept of retaking urban territory previously immune to the hard power of the state was a campaign promise made by Gov. Sérgio Cabral, as security is a state prerogative in the Brazilian constitution. He took office in 2007 and was considered such a threat that the major drug cartels torched buses and wreaked havoc in the formal city. (Most of the city’s daily drug violence is generally confined to favelas and their vicinity.) The Santa Marta prototype was soon repeated and now there are 21 favelas under state control, the majority with UPP units firmly in place, and two of the largest under military occupation while new UPP officers are trained.

UPP is undeniably the most talked about policy in the city, the word on everyone’s lips. Its mastermind, State Secretary of Security José Beltrame, is an undisputed hero, and there is constant speculation he will run against Cabral in the next gubernatorial election. He demurs, insisting that he is not a politician. Most important, he inspires public trust in a country where federal ministers resign because of corruption accusations on quite literally a bi-monthly basis (President Dilma Rousseff has lost seven ministers and counting since her January 1, 2011 inauguration). When police apprehended Antônio Bonfim Lopes (alias Nem), the boss of Rocinha, Rio’s largest favela, in November, his comments praising Beltrame were widely reported in the media. It seems even his opponents are rooting for him.

While UPP has achieved its main goal of retaking previously extra-legal entities, it has a mixed record with other strictly crime and policing matters. Officers may patrol where teenagers with assault rifles once ruled, but cynics say that the guns are still there – the owners just wear uniforms instead of surf shorts. The drug trade, for example, has most certainly not disappeared. It has gone indoors — open-air drug-selling corners, known as bocas de fumo (mouth of smoke), are generally a thing of the past in UPP communities — and expanded its delivery service, as the real clientele was never really the working poor of the favelas, but the moneyed elite of the formal city. Homicides are down, but petty crime and domestic violence are up. While some of this spike is likely the result of cases being reported for the first time, the changing of the guard also plays a role. The drug gangs, while hardly uniform in their behavior — much depended capriciously on the personality of individual drug lords — generally had a zero tolerance for any kind of disturbance, and theft was nearly unheard of. Punishment was meted out with an iron fist, but it did keep residents in line, no different than modern dictatorships where street crime is nonexistent. The UPP, despite their training, simply don’t have the kind of penetration — physically and culturally — into all of the recesses and alleyways of a favela.

An area where UPP uniformly excels, however, is in raising the real estate values of surrounding neighborhoods. One might call this a side effect, insofar as boosting house prices is not in their mission statement, but then look at the pattern of UPP implementation: It happens almost exclusively in the Zona Sul and Tijuca, the two affluent areas of the city in close proximity to favelas. One of the local managers for UPP Social, the city’s social service intermediary and soft power in communities with UPP, posed this very question to a UPP commander in his favela. Accused of favoring the most privileged part of the city, the officer told him, “We didn’t go to the richest neighborhoods. We went to the favelas with the highest volumes of drug sales so we could have the biggest impact.” That retort certainly turns the question on its head, a stark reminder that the ill effects of the drug trade were not caused in a vacuum. The consumers are more than culpable, too. As favela-rights activists have pointed out, why doesn’t the UPP invade the high-rise condos and nightclubs at the terminus of the drug trade?

For the middle and upper classes who sing the praises of the UPPs, amplified by the relentless drumbeat of the Globo media empire (whose major source of print revenue is real estate advertising), the matter is central. For decades, real estate prices have hardly budged, in large part because of a perception that one is less safe the closer one is to a favela. (The problem is that in Rio, with its topographic extremes, everyone is close to a favela.) Many Cariocas are acutely aware of UPP’s ability to change the perception, and price, of their dwellings. In an October 2011 letter to the editor to O Globo, a reader angrily wrote, “I won’t believe in UPP until it occupies Rocinha. My condo value has been depressed for years.”

A month later, she got her wish. São Conrado condos jumped 30 percent in value on the news of the police takeover, conveniently scheduled during a long weekend when the nearby elite could escape to second homes outside the city. Rocinha residents, by contrast, for the most part holed up with provisions and firesale priced bootleg DVDs in the event of a protracted gun battle that would keep them confined to their homes.

“Rio has definitely become a safer city since 2007, when you couldn’t walk down a South Zone street with a cell phone to your ear for fear of having it snatched away.”

Meanwhile, economics research is just starting to document this phenomenon. Claudio Frischtak and Benjamin Mandel released a New York Federal Reserve Staff Report in January 2012, “Crime, House Prices, and Inequality: The Effect of UPPs in Rio,” that explains, “The empirical results, notwithstanding some heterogeneity in the effectiveness of individual UPP stations, confirm widely reported anecdotes of abated violence and of skyrocketing residential property prices in the formal housing markets surrounding the favelas.” Julia Michaels, a longtime resident of Ipanema and found/editor of the Rio Real blog, which is tracking the recent changes in the city, comments, “Rio has definitely become a safer city since 2007, when you couldn’t walk down a South Zone street with a cell phone to your ear for fear of having it snatched away. This is surely due to improvements in police policy and training, both of which still have a long way to go. But the state is on the right track. Less clear are commitments from the state and the city to deep and lasting social policy initiatives, with fair access to quality low-income housing and youth programs at the top of my list of priorities.”

Favela Gentrification

Walk up to the top of Dona Marta, or take the free funicular installed and built shortly after the installation of UPP, and it’s hard not to be impressed by the view. The bay, the ocean, the lagoon, verdant hillsides, Sugarloaf Mountain and the teeming city below are spread out in front of you. Over your shoulder, the statue of Christ the Redeemer, with his trademark open arms, stands tall. In the foreground, Santa Marta cascades down the hill, its houses wedged into other houses, packed tight as a drum and seemingly defying the laws of physics. Don’t be surprised if there are some gringos at the top taking in the view as well.

Santa Marta is being promoted as the model favela with a well-established UPP that doesn’t see any of the conflicts that have plagued other locations: Renegade attacks on police, protests about arbitrary curfews and the prohibition of bailes funk, all-night parties with competing sound systems. At the base of the hill, the tourism board has built a permanent information booth, and a signboard with a map indicates points of interest for a walking tour.

“I am worried that poorer residents will leave the community and not have anywhere to live because the cost of living here is so high.”

Thiago Firmino, a local go-getter who I recognized from a newspaper article about his multitude of Santa Marta enterprises, leads tours, rents out his rooftop for private parties (a new trend for edgy socialites), DJs those parties and organizes paintball sessions in the forest above the top of the hill. On the day that I ran into him, he was guiding a television crew filming a local artisan who had fancifully decorated the entire inside of his house with recycled materials. Certainly, he has capitalized on UPP and the opportunities that integration with the formal city has brought.

But what about the flip side of UPP? He explained that with the arrival of the UPP come the rest of the laws of the state. Building codes, for example, enforce a three-story limit in a dense environment where building up is one’s biggest asset — the opportunity to provide a home for your children when they start a family, or to earn extra income from renters. A growth boundary to prevent further deforestation on the fragile hillside means the supply of new land is effectively zero. Regulated utilities also mean higher bills, and property taxes will be collected for the first time.

“I am worried that poorer residents will leave the community and not have anywhere to live because the cost of living here is so high,” Firmino admitted. “Electricity is still being billed irregularly by Light [the local utility company], public works still don’t have start dates, there is still a lot left to be resolved in our community.”

In particular, renters will be bearing the brunt. The rates of homeownership are generally high in favelas, however, and renters are more likely to be on the economic margins in the first place – certainly not investing in a first-rate sound and lighting system, like Firmino had done for his rooftop party pad. Indeed, from 2007 to 2009, rents have risen 6.8 percent faster in favelas than in the formal sector, according to a recent study by Marcelo Cortes Neri, an economist at the Fundação Getúlio Vargas.

As for house prices, the boom that has echoed through the formal sector is, in ways, even more pronounced in favelas. Despite a lack of formal title, there is a bustling market in favelas, where buyers and sellers transact houses, if not the land underneath them, and the ownership is locally recognized in the registry maintained by the residents’ association. In the 1960s, the government mandated that every favela create a residents’ association that has fé público (public faith) to handle internal administrative matters — a tacit admission of the state’s unwillingness or inability to offer basic public services to the swelling ranks of the city’s poor and informally housed. If security concerns depressed the formal real estate market near favelas, then the effect was that much worse in the favelas themselves, where gunshots weren’t just a distant echo but left pockmarks on the walls. While flyers advertising houses or rooftops (for new unit construction) were a common enough sight, even in the roughest times, they have multiplied in the UPP era and, most tellingly, the asking price has skyrocketed.

The favela of Babilônia is perched behind the Leme neighborhood at the far end of Copacabana Beach. It served as the setting of the 1959 Oscar- and Palme d’Or-winning classic Black Orpheus and was immortalized in verse by American poet Elizabeth Bishop in “The Burglar of Babylon.” Just high enough to see over the roofs of the Copacabana high-rises below, Babilônia is peppered with jaw-dropping views of the Atlantic Ocean. The UPP arrived in June 2009, and since then there are some curious records to be found in the residents’ association archives, which I have been tabulating for a study of favela real estate markets.

Prices have skewed as high as R$50,000 ($27,800 USD) for a small, second floor unit of a house when a few years ago they could be had for R$12,000 ($6,700 USD). In August of last year, an owner swapped for a house in Realengo, a formal neighborhood in the city’s West Zone – on a commuter rail line, but a long ride from downtown and Zona Sul jobs and even further from the beach, which is within walking distance from Babilônia. In other words, without the drug gangs but still without title to the land, a piece of informal real estate in a prime location is considered equivalent in value to a piece of formal real estate in a less desirable neighborhood. Finally, since the arrival of UPP in 2009, three foreigners have bought homes in Babilônia, a dead giveaway when they list passport numbers instead of Brazilian identification numbers on the real estate transfer form.

Carlos “Palô” Pereira, vice-president of the Babilônia residents’ association, points squarely at foreign demand in his concerns about the unexpected changes wrought by UPP. “It’s your fault,” he said to me, half-joking and half-serious, when asked him about favela gentrification. At this point, the goal of the association is to deter anyone from selling their home to someone, foreign or not, from outside the community. If there is too much turnover too fast, Pereira worries that the social character of the neighborhood will deteriorate. To that end, the association’s real estate transaction fee has gone from 5 to 10 percent. Of course, anyone hoping to avoid the fee can close the deal on a handshake, but the benefit of registering is the assurance that the property in question is not slated for demolition due to ongoing urbanization projects.

Indeed, a visit to Babilônia these days requires dodging front-loaders and yielding to workers with bags of cement climbing the staircases that crisscross the hillside favela. As part of the Morar Carioca effort, city officials plan to turn Babilônia into the showcase of “green” informal upgrading through the use of recycled or renewable construction materials, the installation of a community garden, and the promotion of rainwater capture and recycling.

The rhetoric is lofty and the intentions are certainly in line with 21st-century sustainability norms, which are not quite yet the cliché in Brazil that they are in North America, but they belie an obvious truth: Favelas are already more sustainable than how most of Rio lives anyway, thanks to small housing units, a propensity to walk and take public transportation, and minimal use of utilities. Meanwhile, the green upgrades are remaking Babilônia without any community input. Morar Carioca does not have a participatory planning mechanism, and residents are upset, for example, that houses higher up the hill will be demolished for a greenbelt surrounding the favela to prevent further growth.

What Does It Means to Live Like a Carioca?

Morar Carioca’s tagline — all favelas urbanized by 2020 — should come with a footnote: Except for those that will be demolished. The haircut on the edge of Babilônia is comparatively minor given the less-talked-about cases of favelas that have been or will be outright removed from the map. In May 2011, the Municipal Housing Secretariat (SMH in Portuguese) unexpectedly began marking homes for demolition in the Favela do Metrô, a stone’s throw from Maracanã Stadium, where the finals of the World Cup will be staged. Soon after came the forced eviction notices and the bulldozers. A few residents held out and soon found themselves living in a ghost town quickly invaded by rats, mosquitoes and crack addicts. Those who left were sent to public housing projects — nearly two-thirds to a nearby, recently built project, but another quarter to housing 43 kilometers (27 miles) away.

The eviction attracted international attention, providing a case study in the concerns raised by UN Special Rapporteur for the Adequate Right to Housing, Professor Raquel Rolnik of the University of São Paulo Faculty of Architecture and Urbanism. In December 2010, she wrote an open letter to the Brazilian government with concerns about forced evictions in preparation for the World Cup, building on her December 2009 report on the positive and negative impacts of sporting mega-events. It is precisely the opaqueness and arbitrariness of an act like the evictions in Favela do Metrô – no pretext provided, no answers forthcoming – that Rolnik highlights as she chronicles the displacements, especially of the poor and informally housed, that the Olympics, World Cup and other such events have caused over the decades.

In the context of Rio, she mentions in particular Vila Autódromo, which was slated for demolition in advance of the 2007 Pan-American Games, but spared thanks to popular outcry. One wonders if the small favela, founded in the 1960s on the banks of the Jacarepaguá Lagoon as a fishing community, will be so lucky the second go-around. Vila Autódromo is on the literal doorstep of the Rio Olympic Park, occupying some of the most valuable real estate in the city. The community’s first inhabitants could never have imagined this turn of events when they arrived in Barra da Tijuca — then an uninhabited stretch of mangrove swamps, lagoons and oceanfront; now a postmodern sprawl of shopping malls, car dealerships, highways and gated condo complexes.

The Vila Autódromo saga is a complicated one, largely hinging on a 99-year lease given by Gov. Leonel Brizola in the early 1990s. As a result, the SMH is attempting a divide-and-conquer strategy to convince individual residents — rather than negotiating collectively with the community — to voluntarily give up their homes and take a 40-square-meter unit in a new housing project. In fairness, the project is only a couple kilometers away, meaning residents can send their kids to the same schools and patronize the same hospital, but the process has split the community. Those who have built up well-apportioned homes over decades see the move as a huge step down; those in more precarious housing on the oft-flooded banks of the lagoon would gladly take a new place. The situation has gotten ugly, as a community activist working in Vila Autódromo told me in confidence that the anti-removal camp has accused those who want to leave of being traitors.

“When the Portuguese royal family arrived to make Rio the capital in the early 1800s, the nobles of the court promptly seized upwards of a thousand houses for themselves. You could say that was Rio’s first housing crisis.”

Frustrated by the lack of dialogue with the city — making a rare public appearance, Housing Secretary Jorge Bittar pointedly spoke from a podium erected in a neighboring parking lot, rather than in the community proper — Jane Nascimento, president of the residents’ association, has enlisted the help of urban planning students from local universities to help Vila Autódromo create an urbanization plan to serve as a counter-proposal. She believes that the wide streets, stable housing stock and lack of drug traffic make the community ideal for Morar Carioca – they just need some public investment. Only a few kilometers away, the comparable Asa Branca favela is going to receive a government-funded facelift; why not spend the money — budgeted at R$80 million ($46 million USD) — for a new housing project on making Vila Autódromo an urbanized favela showcase for the Olympics?

The crux, it seems, are differing visions of what it means to live like a Carioca. A recent cover of lifestyle magazine Veja titled The Carioca Style of Living shows an apartment on the umpteenth floor of a Zona Sul condo — all clean lines, designer furniture and elegant features — with a view overlooking a lagoon, green hillsides and more condos, with nary a favela in sight.

To Theresa Williamson, who directs Catalytic Communities, a Rio-based NGO that agitates on behalf of favelas and maintains the watchdog and community reporting site Rio On Watch, this vision for Rio is paradoxical: “There are no people in that image, no sense of community.” The sterility of that kind of lifestyle, however, is the social ideal for a country that is still gripped by the aesthetic ideals of modernism. With that kind of model in mind, no wonder the SMH can’t understand why Vila Autódromo residents don’t want to leave their self-built houses for identical apartment blocks. Architect Pedro Rivera, Director of Studio-X Rio, finds the comparison “a bit of an exaggeration,” but agrees that there is a connection between SMH and the modernist aesthetic.

Sadly, housing eviction has a long history in Rio. “When the Portuguese royal family arrived to make Rio the capital in the early 1800s, the nobles of the court promptly seized upwards of a thousand houses for themselves. You could say that was Rio’s first housing crisis,” Augusto Ivan, a professor of architecture and urbanism at the Catholic University of Rio, notes.

Fast forward 200 years and the process repeats, driven by economics rather than royal privilege. While Morar Carioca purports to improve the lives of favela residents — and those who are still there when the dust settles will certainly see improvements — the difference between those incremental improvements, and the stratospheric multiplication of wealth for Rio’s elite in the run-up to stardom on the world stage, is vast and unbridgeable.