<p>Pakistan is facing a housing shortage due to a rapidly growing population and increased gap in housing demand and supply. Different housing initiatives have been implemented by the public and private sectors to address this. Low-income groups, however, find that most of these initiatives are out of their reach, so they turn to illegal means, such as Katchi Abadis, to obtain housing. Few governments often forcefully remove and destroy these informal settlements rather than enhancing their quality of life. As a result, the urban poor experienced more poverty and unstable living conditions. Because these settlements constitute a significant portion of the urban economy, attitudes toward them need to change. In many developing economies, improving informal settlements and providing access to better housing can help to strengthen sustainable urbanization and lessen social inequality. Using Lahore as a case study, this study evaluates Katchi Abadis' potential to address housing issues. A review of various global practices for upgrading informal settlements was conducted for this purpose. To evaluate the potential of both regularized and unregularized Katchi Abadis, primary data were gathered from them and subjected to a star model assessment. The evaluation was conducted using five distinct aspects, against which various indicators derived from existing literature were made. These aspects were Katchi Abadis regularization and upgradations; physical dwelling; availability and satisfaction of utility services and public amenities; area accessibility; and security and safety. The results showed that the regularized Katchi Abadis had a higher cumulative score than the unregularized Katchi Abadi.</p>