NEW DELHI: The Centre has enhanced floor area ratio (FAR) and ground coverage in Delhi, a move that is likely to facilitate more effective utilisation of space in the teeming metropolis.
The FAR for plots measuring 750 sq metres to 1,000 sq metres has been enhanced from 150% to 200% while FAR for plots measuring 1,000 sq metres and above has been hiked from 120% to 200%.
Similarly, ground coverage has been increased from 40% to 50% for plots of 1,000 sq metres and above while that for plots of 750-1,000 sq metres will remain at 50%, according to a statement from the urban development ministry.
"This is one more signal from the government to kickstart the economy. It is a good signal for greater urbanisation, for brownfield redevelopment of Delhi," said Rajeev Talwar, executive director of real estate developer DLF. Stock prices of Delhi-based real estate companies, including DLF, moved up significantly in the afternoon trade on Wednesday. DLF ended the session at Rs 151.95 on BSE, up 7.2% from the previous close while Anant Raj closed at Rs 54.8, up 9.71%. Unitech was up 4.41%, closing at Rs 18.95.
DLF has a large land bank in Delhi including a prime 23 acre plot of land close to the Rashtrapati Bhawan that it intends to develop into a luxury housing project. The government has talked about vertical developments in cities rather than going for an urban sprawl and this move will help improve utilisation of space in the city.
The statement, however, does not provide clarity on whether buildings utilising the additional FAR will be allowed to go higher than the stipulated four floors (17.5 metres) and whether there are any other conditions for utilising the additional FAR. "These kind of big plots are in areas which have relatively better infrastructure. It will now encourage redevelopment of these areas," said Amit Sarin, director at Delhi-based builder Anant Raj Industries. At an FAR of 200%, a 1,000 sq metre plot can accommodate 21,528 sq ft of built space.
Santhosh Kumar, chief executive officer-operations at property advisory firm JLL said while there will be challenges of infrastructure with this increase in FAR, it will eventually benefit buyers.
"Supply of housing in the city will increase and prices will come down to realistic levels," Kumar said. The challenges that Kumar mentioned include parking issues in areas where supply of housing will increase, along with the additional load on infrastructure related to sewerage, electricity and water supply.
Property prices in many parts of Delhi have been under stress over the past two years because of an increase in supply and a subsequent decline in demand as well. Prices of apartments in upmarket areas such as Vasant Vihar, Panchsheel, Defence Colony, Greater Kailash and others have dropped 20-30% and are likely to be impacted further.
"Older inventory of apartments will now be more difficult to sell as buyers would want to wait for new apartments," said a broke. Urban development minister Venkaiah Naidu approved the changes after the DDA proposed amendments to this effect to Master Plan Delhi - 2021 after inviting objections and suggestions from the public.