Provision of security of tenure and infrastructure in unauthorised residential areas of Third World cities may render such areas more attractive to higher income households. The danger of displacement is increased if regularisation involves additional costs to residents. The impact of upgrading in a squatter area in Lusaka is evaluated, to ascertain the extent to which it improved living conditions, benefited all residents equally and led to displacement of existing residents. Living conditions had improved for all residents of the area and there was little evidence of displacement or increased rents. However, upgrading had necessitated resettlement of some households in an adjacent overspill area, with a slightly better residential environment and the benefit of larger housing loans, leading to a process of differentiation within the area.
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