According to reports, the Indian Government has given its approval to the proposal of increasing FAR in the state of Delhi. The rise in the FAR is for housing plots which measure 750 sq. m. or more where the FAR has been raised from 150 to 200. For plots measuring more than 1000 sq. m. the FAR has been raised from 120 to 200 while ground coverage has increased to 50% from 40%. Allotting higher FAR has been considered to be a good move as it would make apartments larger. Ticket sizes might increase too without any changes in the norms of density.
FAR or Floor Area Ratio is the ratio between the total floor area covered by the land and the total area of the plot on which a residential property is being developed. Unlike Mumbai, which is constrained for space, Delhi has abundant space spilling over to other areas of the NCR and hence rise in property prices may not be seen. Buyers can be in a win-win situation with this move.
Even though no clarity has been offered on the increase in the number of units permitted on larger plots, its provision has been made in the Delhi Master Plan draft for 2021. It allows for a rise in the numbers of residential units. Under the provision, the concurrent augmentation, cost of allied civic infrastructure has to be undertaken by developers and paid to the authorities. The provision made on the draft master plan could be used for increasing the numbers of dwelling units.
If the provision is used judiciously, then in conjunction with the rise in FAR could be used for raising the stock of housing on residential plots from now onwards. If this is implemented, then there would be some movement towards making more houses. An allied price reduction would be likely then. With restrictions in heights for individual housing plots not raised from the present 17.5m along with provisions of stilt parking, the developments are more likely to remain at the same height.
The increase in FAR may produce an impact on plots for group housing, where coverage on the ground will be 50% now, which was previously at 33.3%. This shall allow developers to build bigger apartments, even though FAR was at 200 already under the master plan. No restrictions on heights have been applied to group housing plots, which is why no issue for these kinds of developments shall come up when it comes to provisions of heights.
A sizeable increase in stock prices of players listed on the various stock exchanges has been seen. Many companies hold prime properties in Delhi or other regions. Better evaluation of such lands on the grounds of rise in the FAR for housing plotted developments is a probable factor behind the rise in respective stocks. The impact could have been seen in the short term. However, more should be available when you go forward, when the middle term review of the 2021 master plan is completed and changes posted by the year’s end.