Increase in FSI expected to boost affordable housing

Chennai

With soaring land prices, owning an apartment continues to be an elusive dream for most aspiring home buyers. The State Government’s move to provide additional FSI (Floor Space Index) to projects catering to the LIG (lower Income Group) and MIG (Middle Income Group) segments, is expected to ease the pressure.

As per the State Budget announced last month, developers can now construct more built-up area without incurring any additional costs, for LIG and MIG housing.

Developers in the city welcome this move, unanimously. Devesh Bhuva of Prince Foundations says, “This is a great initiative and we are certain that it will boost the affordable housing market. This is definitely a step in the right direction. However, there is no clarity, as of now, about revised guidelines or implementation.” The current FSI for multi-storeyed buildings is 2.5 and for ground floor plus three floors is 1.5. The new guidelines have not been announced.

There is a sense of cautious optimism among developers. While they believe that the move to increase FSI can only be good news for the real estate sector, questions about implementation, clarity on new guidelines and rules, remain unanswered. Suresh Jain, MD, Vijayshanthi Builders, says, “This move will make a lot of sense for projects in the outskirts, where the land price component is not as high as it is in the city. The only way to ensure that the benefit of this initiative reaches everyone, is to keep a check on pricing.Land price accounts for close to 75% of the cost of an apartment within the city and as long as this trend continues, affordable housing will remain a dream.”

According to the provisions under CMDA’s Second Master Plan, projects spread across 2.5 acres or more must reserve 10% of their area for construction of 45 sq m units (or less) for EWS (Economically Weaker Sections). Only one bedroom apartments can be constructed in that space. But Suresh feels that the size of these dwelling units needs to be increased from 450 sq ft to about 700 sq ft. “The move will not make much sense otherwise,” he adds, “How can a family live in a 450 sq ft one BHK apartment? And how will an increase in FSI benefit home buyers, if land prices, construction and labour costs continue to skyrocket? That’s why the Government needs to keep a tab on land pricing. That will make all the difference.”

Apart from pricing, another important point that developers raise is that of infrastructure and connectivity. S Ramakrishnan, CEO, Marg ProperTies, says, “Affordable housing is still in its nascent stages. While this move is definitely going to help, especially for investments made in the suburbs and outskirts, the need of the hour is support infrastructure and connectivity. People can only afford to buy apartments in the outskirts, but what’s the point in investing in these projects if no steps are taken to build adequate social infrastructure and spruce up public transport? Growth corridors such as OMR, GST and ECR hold a lot of promise and they need to be further connected through a grid development. This, along with additional FSI, will promote long-term sustainable development.”

It may be premature to debate the impact of the move to provide additional FSI, as clear guidelines and policies are yet to be framed. However, developers believe that the real benefit of the move can be reaped only if larger issues like pricing, infrastructure and connectivity are addressed.

Source: Times Property, The Times of India, Chennai