"Favela chic" has seen areas once synonymous with poverty and violence become fashionable

The sleek concrete and glass rooftop Bar da Laje is nestled in a sea of illegally built red brick houses in one of Rio De Janeiro's notoriously tough hillside favelas.

Once considered a no-go area because of gang violence, the bar, in the city's posher south, offers postcard perfect views of Ipanema beach and lush green mountains.

At night, middle class Brazilians and foreigners rub shoulders sipping cocktails as the Olympic Games unfold around them.

Bar Da Laje is a vivid example of what is becoming known as "favela chic", a phenomenon that has seen some parts of the enormous informal settlements once synonymous with poverty and violence become fashionable, home to edgy art galleries and up-market cafes.


Celebrities seeking the "favela experience" recently included the US singer Queen Latifah and film director Spike Lee, as waiters in T-shirts marked "Vidigal" served drinks and customers posed for selfies.

And while many residents living in and around Vidigal welcome gentrification that has seen an influx of new businesses serving more affluent clients, other long-time residents fear they will be priced out of their homes.

"These changes aren't good for us," Barbara Nascimento, a Vidigal-born activist and literature professor told the Thomson Reuters Foundation.

"I have many friends who have had to leave because they couldn't afford the rent anymore."

The tension sparked by wealthy outsiders gentrifying working class neighbourhoods is not unique to Rio de Janeiro. It's a well documented phenomenon, from London's East End to Sydney's inner west and San Francisco's mission district.

However it is even more complex in the vast, informal settlements of growing cities in developing nations like Brazil due to the lack of formal property title deeds, campaigners say.

On one hand, many residents want formal title deeds, both to allow them to use their property as collateral for bank loans and to provide protection in case of land disputes.

On the other hand, the lack of formal title plays a key role in the supply and demand cycle, ensuring that these neighbourhoods remain as a stock of affordable housing.

Additionally, legal titles can pave the way for access to services such as electricity and water, improving quality of life.

But they also formalise residents' relationship with the state authorities and the taxation system - a status not always welcomed by poorer residents.

Ultimately, property experts say, developers are more likely to buy up land in slum areas if titles are available, pushing prices up and locals out.

"The interest of real-estate developers in the favela areas is huge," Edison Ferrari, director of investment for the multinational property brokerage firm CBRE, told the Thomson Reuters Foundation.

Rio's unique geography, where a series of tunnels through mountains separate different parts of the city, has made Vidigal especially appealing to foreigners and investors.

"In the south zone (where Vidigal is located) it is almost impossible to find pieces of land for new developments."

However while land around Vidigal is clearly seen as a potentially lucrative investment, laws governing favelas and the "big problem in terms of titles" has stopped institutional investors from buying properties there, Ferrari said.

People watch on from the Vidigal favela community as the Olympic torch passes by. Photo / Getty Images
People watch on from the Vidigal favela community as the Olympic torch passes by. Photo / Getty Images

In the absence of large property firms developing high-end apartment blocks or other major construction in the area due to a lack of clear property deeds, niche investors have seen big opportunities.

And it is here that locals say they are feeling the effects.

Nascimento estimates that rents in Vidigal have tripled since 2007, though formal statistics on rent increases or the number of people moving into the neighbourhood do not exist.

"The prices are abusive; they've gone up so much," said Jose Ferreira, a coffee vendor who has lived in Vidigal for more than 40 years.

Ferreira said rent for his one-bedroom apartment has doubled to 800 reais (A$333.18) since 2011, when police "pacified" the community as part of a drive to cut crime ahead of the Olympics.

"Foreigners started coming in and the prices started going up," Ferreira told the Thomson Reuters Foundation, a sentiment that was echoed by other residents.

It's unclear exactly how many foreigners live in Vidigal today, but some estimate there are more than 10,000 residents - and locals observe many more outsiders are moving in.

"Sometimes it feels like there are more foreigners than locals," Aline Gomes, a student shopping in a local news agent, told the Thomson Reuters Foundation.

Local residents don't have the money to party at the new bars or eat in pop-up sushi restaurants, leaving some feeling like outsiders in their own neighbourhood, Nascimento added.

"People who are coming in want the favela experience without the favelados (locals)."