Real Estate, not Gun, Battles Define Tranformed Rio Favela

"Until recently," says Watts, "this hillside shanty town was dominated by drug gangs and widely considered off-limits among both the local and foreign middle class."

"But the favela is undergoing a transformation. The police have taken control of the streets and with the gangs no longer deciding who enters their territory, rental prices have surged more than threefold in three years. Wealthy buyers are snapping up the prime plots, real estate firms are opening offices and more outsiders are moving in."

Vidigal, with its "spectacular views, long history and attraction for artists," has quickly become one of the most fashionable in Rio, and rumors abound that the globe trotting real estate moguls Brad Pitt and Angelina Jolie have even bought in.

"Take away the paramilitary campaign against the drug gangs and what is happening is similar to the gentrification seen in cities such as New York, London, Berlin and Beijing," notes Watts. And some are contemplating what that means for the area's poor families, and those in the city's other 39 slums that the police are trying to "pacify."

"For now, people are happy with the way things are going because they are making more money," says Nicola Tadini, a researcher who is studying the process. "But the gentrification will change this community. Instead of neighbour and neighbour, you are starting to see employer and employee."