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COLUMNSRecent announcement to raise floor area ratio (FAR) is seen as an encouragement to vertical growth ascompared to horizontal growth. Higher FAR has its own advantages and disadvantages. City developmentauthorities have to be careful allowing higher FAR.

Kishor PateAmit Enterprises Housing

Among the various regulations adopted in real estatedevelopment, Floor Area Ratio (FAR) is one of themost critical ones because it decides the intensity ofdevelopment which is permitted in a certain area.Recently, the fact that the urban developmentministry raised the FAR for residential areas in Delhito 200% made headlines news because this willlead to a significant increase in built-up areas inmany parts of the city, thereby infusing criticallyneeded residential supply.

FAR regulations play a big role in any citys real estate development profile and it is therefore important tounderstand the concept. FAR parameters vary from state to state and are governed by the respective citydevelopment authorities.

In other words, increase or limitation of FAR is not city-specific but area-specific. Every city has its own areaswhere higher FAR is permitted, with the intention of encouraging or accommodating growth of a certain marketsegment. Such special FAR will not be applicable in other areas of the city.

Who Makes The FAR Rules?

The Ministry of Urban Affairs, which is the apex body that formulates and administers rules, regulations and lawsrelated to housing and urban development in India, has provided general guidelines via the Model Urban &Regional Planning and Development Laws.

However, the implementation of these guidelines is entirely city specific and therefore in the hands of therespective city development authorities. Essentially, it is the city authorities that are empowered to plan thedevelopment of their respective cities. Whenever a new area opens up for development, a citys developmentauthority will lay down a master plan that stipulates the land use zone, regulations that control development andpermissible FAR for various uses.

How Is FAR Calibrated?

FAR is calibrated according to the nature of a project in terms of the intended usage. Generally speaking, on a plotof 100 square yards with a permissible FAR ratio of 2 allows a total built-up area of 200 square yards the plotarea multiplied by the FAR is the amount of construction that is permissible for that plot. FAR for various zonesand type of usage is notified by the local Development Control regulations. FAR in restricted zones like, say,Lutyens Delhi, may be 1 or even lower, while it would be higher in suburbs.

FAR restrictions are necessary in heritage zones which have protected monuments or other such features whichcould be destroyed or otherwise impacted by increased FAR in these areas. The issue of whether our citiesshould grow horizontally or vertically is basically one of limited available supply, and whether horizontal growth isa real solution in context with growing populations and increasing land prices.

Pros And Cons Of Increasing FAR

There are advantages and disadvantages to increasing FAR. Lower FAR means higher horizontal growth, whichis positive in terms of environmental sustainability but negative in terms of available supply. Higher FAR implieslower horizontal spread and therefore lower consumption of available real estate, which means that it limits theescalation of property prices to that extent. It also implies a more workable set of infrastructure parameters thanhorizontal spread calls for.

Providing infrastructure to accommodate horizontal growth (i.e. lower FAR) implies more infrastructure over largergeographic areas, whereas higher FAR calls for more intense and specific infrastructure. Increased FAR basicallyallows developers to save on land costs, and gives them a wider arena to operate on. This means that the units inthe projects they build will be cheaper and also more plentiful in profitable areas, which is beneficial for propertyinvestors and their eventual buyers alike.

However, increasing FAR in some of a city's areas for this reason alone is not a good thing, as it will result in aninfrastructure deadlock and eventual fall in prices. On other words, assigning additional FAR is not somethingthat should be done arbitrarily or without fully understanding the 360-degree real estate dynamics of a certainlocation.

COLUMNS