Floor Area Ratio (FAR) – All About It

Floor Area Ratio (FAR) is a term frequently being used in Real Estate and is one of the key determinants for development in the country. A low FAR, as is considered in the case of India is a deterrent to construction. The real estate industry has always been longing for a hike in FAR. The rapid urbanization has already put pressure on the limited land resources, especially in Delhi. Extra FAR would help developers with extra space and in meeting the demand and supply gap.
If we go by how developers see it, an increased FAR means they can build more, sell more and thus prices of projects could go down. However, this alone cannot cut down prices and it needs to be used judiciously, not abused.
We keep on getting various updates about increase in FAR or change in FAR in any particular city or residential area. Come lets know, what FAR is all about ?

Floor Area Ratio : What is it all about ?
Lets make it simple by saying in this way : Every city like any structure has a limited capacity in terms of resources and infrastructure. Beyond this capacity, it not advisable at all to put any additional stress on it. This capacity is known as FAR or Floor Area Ratio.
Floor area ratio (FAR), floor space ratio (FSR), floor space index (FSI), site ratio and plot ratio are all terms for the ratio of a building’s total floor area (Gross Floor Area) to the size of the piece of land upon which it is built. The terms can also refer to limits imposed on such a ratio.

How to calculate Floor Area Ratio (FAR). Is there any Formula for calculating Floor Area Ratio ?
Formula for calculating FAR is quite Simple. “Total covered area of all floors divided by the plot area.”
Floor area ratio = (total covered area on all floors of all buildings on a certain plot, Gross Floor Area) / (area of the plot).
For eg. – A real estate developer has a plot size of 1000Sq.mt. and the FAR allowed is 105, in that case a building on 1500 Sq.mt. can be constructed on this plot. It is the ratio of the total floor area in the building compared with the total plot area. The constructed area would include the basic structure, walls, staircase or lobby space.

Can FAR vary from city to city ? 
FAR may be different in various cities, municipality, locality or even depending upon the nature of land- industrial, residential, commercial, agricultural or non-agricultural. This is because the organic growth pattern, population dynamics and construction activities varies from city to city. Much depends on governmental regulations.

What it has in it for buyer?
If a planning authority of any particular city, increases the FAR, market value may double. The land owner in this case has no role to play that directly or indirectly governs the price while they may enjoy all the benefits. It also leads to the point that as the FAR is hiked, the residing area gets higher density building and more residents have to share the common benefits such as lifts, pools, clubs and even electricity and water.
Those who have bought property with lower FAR can have an option of building more and fetch higher capital returns. However, there is other side of coin as well, buying a low FAR property, re-sale value is likely to be better due to lesser density and more open areas.

What if FAR is violated ? 
Violation of FAR might have grave effects. While high-rises have come up in most parts, violation of FAR norms and encroachment of open spaces will be a major challenge to the disaster management team when disaster strikes.

What the maximum FAR value in Indian cities?
Generally it doesn’t exceed 2.5. Even within one city, it is not necessary that the same value is applicable to all areas. What would it be if the FAR value is raised to say 4? Such a hike would mean extreme dense living, almost one lakh people per sq km!

When is FAR violation noticed?
The violation comes to notice only when the developer takes the completion certificate from the concerned development authority. This is why trend watchers insist that as a buyer, you should demand to review the completion certificate.

Going vertical is impossible if FAR value is low!
An adequate FAR value will help in sustainability. If a low FAR value is recommended, it is for your own safety. Even in the case of a disaster, a concrete jungle is a risk. Adequate open space is the need of the day especially in the case of a natural disaster like earthquake. Dense living means you are furthering the risk.

Higher the FAR value, lower is the property value!
Increasing the FAR may reduce the per capita cost on development infrastructure. However, this is not a direct proportion relation. In India, infrastructure is yet to cater to current requirement and hence doubling FAR instantly would put an additional strain on infrastructure.

Prices of flats are not dependent on FAR value alone.
Increasing FAR value is the only way out to guarantee affordable living, true to an extent but imagine the risk of going vertical in an unscrupulous way! Increase in FAR means land values may also go up since buildable space increases. Contrary to the myth, increasing FAR could mean making properties pricier. In the absence of higher FAR values, developmental projects suffer. When town planners determine FAR values, they do consider the health of our development projects as well. There is no hindrance to development even if the projects are based a little away from where the bulk of the population lives.

Lower FAR values means less employment opportunities..
The construction agency employs a sizeable population. The industry as a whole also contributes almost 8 per cent to the GDP. However, the cost of negligence could be disastrous. Maintaining equilibrium between sustained, planned growth and development is important.

Posted By
Alok Upadhayay

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