Freedom is a luxury and it means different things to different people. Stakeholders within Indian real estate, too, have their own set of definitions. While, for a home buyer, freedom may mean having a house of their own at an affordable price, for the developers, the quest may be freedom from multiple bottlenecks – single-window clearance, an industry status, easy funding and most importantly, FSI-free developments.
What does ‘freedom from FSI’ mean?
Freedom from FSI means that builders can make the maximum use of land parcels available, without constraints of FSI limits and for home buyers, this could translate into cheaper housing in and around the city centers.
FSI is floor space index, which is also referred to as FAR (floor area ratio). FSI is the permissible development norm by different government agencies and the local municipalities and it is calculated as the total floor area of every floor with respect to the total area of the plot of land.
In India, every city has its own FSI norm, ranging from 1.5 to 3.75, with Hyderabad being the only city in the country with unlimited FSI. Urban planners, hence, point out how there is immense pressure on the civic infrastructure, with congestion, concrete jungles and no proper drainage systems in the old south Indian city.
The question is whether the freedom from FSI would actually revolutionise the housing market and create surplus housing? Opinions differ across the globe and there is a debate over whether or not urban housing should be concentrated in and around the CBDs with liberal FSI norms, which may put pressure on the infrastructure. Or else, the policies should be aimed at sprawling horizontal growth of the city that would cost more resources to develop beyond city limits.
In India, experts differ on the Hyderabad model of freedom from FSI since India’s urban housing has always been prone to creating a concrete urban jungle. Moreover, experts even point out that in spite of being an FSI-free city, property prices in Hyderabad have grown faster than Bengaluru or Chennai; thus demolishing the argument that freedom from FSI would lead to supply of more affordable housing in the urban pockets of the country. Demand for housing in Hyderabad has also been tilted towards the IT corridor of Gachibowli area.
There are many questions that the urban planners in the country need to delve deeper to find an answer:
- Is freedom from FSI a good or bad idea for real estate developments?
- Has there been any learning from an FSI-free city like Hyderabad?
- What is the ideal FSI and density norm for city development?
Unlimited FSI: Advantages
Ashish Narain Agarwal, founder and CEO, PropertyPistol.com, asserts that freedom from FSI may not augur well for real estate. FSI is a key component of the sector, as it determines a fixed number of houses built in a planned manner to manage costs, the plot’s capacity to hold the property, etc. Not implementing FSI norms, may hamper the fabric of the city in the long run, he feels.
“An already space-starved city like Mumbai will face additional burden on basic infrastructure and lack of green and open spaces. The absence of FSI may result in unplanned or haywire urban planning and construction that can hamper the safety of the project, increase variable costs and create infrastructure challenges for a city. FSI is a very pertinent factor in the real estate sector, to help in the creation of a well-planned, developed city. Hyderabad implemented free FSI, to encourage the growth of the real estate sector in the city. However it is also important to focus on the challenges that this can bring to the city,” says Agarwal.
See also: Carpet area, built up area and super built up area: Know the difference
Freedom from FSI: Concerns
Aditya Kushwaha, CEO and director, Axis Ecorp, on the other hand, believes that the concept of freedom from FSI is a good idea but policymakers need to ensure stronger regulation and a well-defined timeline that projects need to follow. It has been observed that some projects are deliberately delayed, in anticipation of new FSI opportunities from the government. The regulations need to be transparent, and we must move towards freedom from FSI.
“At the same time, the Town and Planning Department of each city where FSI opportunity is being given, needs to play a proactive role in deciding the parameters which result in timely delivery of projects and avoiding undue pressure on civic infrastructure. The Master Plan for the city drives the FSI and density norms for city development. Factors like land availability and proposed targets are considered, to plan for the civic infrastructure required along with FSI regulations. A standard, one-size-fits-all FSI and density norm cannot be applied to various cities and areas,” says Kushwaha.
What is an ideal FSI limit?
The ideal FSI cannot be determined, because it differs from region to region. It should be decided, by keeping in mind the growth, infrastructure facilities, open spaces and green cover. Density norms cover several aspects like economic, social, physical, environmental and built structures, among others, in town planning of a particular region.
Hyderabad’s commercial development, including IT parks, data centres and commercial spaces, was built with a high FSI ratio. As a result, the locations that were created resulted in a massive inflow of people occupying these spaces. It ended up putting increased pressure on the existing civic infrastructure of the city like roads, sewerage and electricity. The key learning from the development of Hyderabad has been that the government needs to ensure that civic infrastructure is capable of handling the increased traffic with freedom from FSI.
Property prices and demand and supply of housing in any given city is not dependent on the supply, or affordable supply, alone. Rather, it has a critical linkage with the economic activity in the given city and the job market. It is, hence, argued that freedom from FSI would lead to more chaos and haphazard growth of the urban centers of India, than creating affordable housing for the masses.
(The writer is CEO, Track2Realty)
