Delhi Real Estate Gets Far-Reaching Reform As Floor Area Ratio Raised – Financial Express – 27-Nov-2014
November 29, 2014 - Uncategorized
The urban development ministry on Wednesday approved a proposal by the Delhi Development Authority to raise the floor area ratio (FAR) — the key regulation which controls the size of the buildings in the capital — acceding to the long-standing demand of realtors. Simply put, FAR is the ratio of the total building floor area to the area of the plot, so raising it means allowing for more floors. Delhi goes to the polls later this year.
The urban development ministry has raised it in respect of plots of 750-1,000 sq m from 150% now to 200%, while the same has been increased from 120% to 200% for plots of 1,000 sq m and above, according to official sources. While this will help the vertical development of buildings, sources said the change also entails an increase in the ground coverage area from 40% to 50% for plots of 1,000 sq m, thus aligning it with plots of 750-1,000 sq m.
Samantak Das, chief economist and director (research), Knight Frank India, said the move would allow an additional 372 sq m of construction in a project of 750 sq m. According to Das, the additional FAR allowance will also prove beneficial for redevelopment projects and may also aid in redevelopment of some old housing societies as well.
The development was welcomed by the Delhi-based real estate developers and saw realty stocks shoot up by close to 10% on the BSE.
Although analysts tracking the real estate sector said the impact would have been greater had the FAR been raised in the National Capital Region comprising adjoining areas of Noida and Gurgaon, developers pointed out that it is already higher in those places.
The key benefit of the higher ceiling would be felt by Delhi-based real estate firms like DLF, Parsvnath, Ansals, Anant Raj and host of smaller, local developers like Uppal, Saluja. Individual landholders will also benefit from this enhancement as it could free up more land in the city.
“This move is good for the urbanisation plan of the city and will help in increasing supply and stabilising prices in the capital,” a DLF spokesperson said.
Neeraj Gulati, managing director, Assotech Realty, pointed out that with extra FAR, more space would be available for development that would be easy to adhere to systematic design layout, which is a crucial requirement at present.
Rohit Raj Modi, president, CREDAI NCR, however, said that though this extra FAR would definitely help developers with more space and would help match the demand-supply gap in Delhi, the increase shall be effective if accompanied by an increase in dwelling units, density and height.
It is not clear so far as to how the urban development ministry has looked at these three aspects while framing the new norms. However, according to Anuj Puri, chairman and country head, JLL India, there is a provision in the draft Delhi Master Plan 2021 that allows for an increase in the number of dwelling units.