In its recent draft report, a Planning Commission steering committee has mooted providing additional FSI (floor space index; the ratio between built-up area and plot size) as development rights for cities.
However, it should not come free of cost, the committee proposed. The panel said the charges for additional FSI and land-use conversions should be at least 50% of the circle rate in the area and should be determined professionally. Further, it added that additional FSI should be permitted selectively.
This recent development from the Central government’s front has left the developers’ fraternity gung-ho. Says Lalit Kumar Jain, CMD, Kumar Urban Development Ltd (KUL) and President, CREDAI: “It’s high time the government intervenes and wakes up to the needs of consumers in cities. Optimising the usage of urban land is the key to urbanisation success. In this regard, the only option is growing vertically otherwise you’ll be killing agricultural land and green cover to meet housing needs.”
Seconds Arvind Nandan, Executive Director – Consulting Services, India, Cushman & Wakefield, “There is little doubt that major cities need to grow vertically in order to accommodate burgeoning demand for built-spaces. Densification of development, through scaling up of FSI is a step in the right direction and would lead to creation of larger volumes of real estate. This is much-needed, keeping in view the demands of rapid urbanisation, particularly in high-growth cities.”
If this move is implemented, Mumbai’s real estate landscape will witness a sea-change, feel developers. “With increasing population, the pressure on the city’s infrastructure has increased drastically thereby leading to several infrastructure-related problems.
“Today, FSIs are being followed in the metropolis for housing, parking and urban renewal and only benefit projects where slums are being reconstructed and in case of dilapidated buildings,” says Dhaval Ajmera, Director, Ajmera Realty & Infra India, adding that this move, which is basically a mode for revenue collection, if put back into infrastructure development, will benefit the city a great deal.
Considering the vast demand and supply gap, affordable housing is the need of the hour. Yet, due to high costs, it becomes difficult for developers to address the issue successfully. Says Shailesh Sanghvi – Director of Sanghvi Group of Companies: “Property prices, particularly in top metros across India, have escalated significantly over the years as a result of rising interest rates, increase in various property related taxes, costs of raw materials, among others. Given these high costs, it is very difficult for real estate developers to deliver affordable housing projects to cater to the middle-income groups (MIG) and lower income groups (LIG).Providing extra FSI, particularly for affordable housing projects, will be a welcome move by the government to ensure developers meet yield decent margins (which are as it is low), and at the same time provide spacious and habitable apartments to home seekers.”
It is, however, felt that the move needs to be welldefined before it’s put into actual implementation. Says Nandan, “This requires adequate policy-initiatives, granular detailing and safeguards. Any increase in FSI has a cascading effect on infrastructure demand. Most of our cities are poorly provided in this respect. Not merely in terms of roads and transport, but power, water, sewerage, etc are less than sufficient. We would not be able to fix the problem of inadequate real estate by merely provisioning for more real estate. Unless there is enough inherent strength, more FSI will only compound the ills of urbanisation. Finally, the charges for extra FSI need to be carefully determined, so that the impact does not eventually translate into rise in prices.”
Source: The Times of India, Ahmedabad