DDA’s Proposed FSI Increase Not To Impact Listed Realty Players

A leading financial daily has reported that Delhi’s planning body may allow affordable housing (“built for the poor and middle-class”) to increase the floor space index (FSI) three times over from 200 to 600. Quoting certain officials who requested anonymity, the report said the Union Urban Development Ministry, which administers Delhi's civic and urban planning bodies, has asked the Delhi Development Authority (DDA) to increase the FSI and include the revised figure in the Delhi Master Plan 2021, an updated version of which is likely to be released by May 2013.

FSI is the ratio of the total floor area of a building to the available plot area, the underlying concept being the optimal utilisation of land. If the FSI is increased by three times, it would result in much higher supply of apartments in the aforementioned category. The impact of this would be some amount of easing on the realty prices front.

According to the report, the increase in FSI will first be applied in the space of housing for the economically weaker sections and low income groups, which face a huge shortage of homes in Delhi. There are also plans to extend the same to housing for the more affluent sections.

In this regard, we spoke to some of the Delhi-based realty players, and it appears that not many of them are enthusiastic about this. One of the leading players stated that there are two aspects to this. The first is how to decide what constitutes the economically weaker section and secondly, how many listed players are competing in this space. In addition, it remains to be seen how fast the DDA moves on this front, as it is still only at the proposal level. Further, most of the listed players have hardly any exposure to this space.

Thus, we are of the opinion that until the DDA comes out with revised and detailed guidelines and more clarity emerges on how to categorise the economically backward class or poor class, it is too early to comment on the impact this proposal would have.