Karnataka notifies premium FAR; developers want other states to follow suit

Industry experts say it is a move that necessitates a review of the FAR available in other parts of the country and how it may be used wisely to address rising urbanisation and land scarcity.

The Karnataka government has recently notified the facility of premium floor area ratio (FAR), allowing construction of an additional 0.6 times the existing FAR, which apart from bringing revenue to the government, is also likely to give a fillip to vertical growth in the realty sector.

Welcoming the move, industry experts say it is a move that necessitates a review of the FAR available in other parts of the country and how it may be used wisely to address rising urbanisation and land scarcity.

Looking closer in NCR, for instance, the Ghaziabad Development Authority (GDA) allows 2.5 FAR, Noida 2.75, and Gurugram 2.4. The provision of premium FAR is there in every market, but the developers can purchase it at an additional cost, which is often high.

“The government should not view this as a money-making scheme including the sale of additional FAR at excessive rates, as it appears to be. Given today’s market conditions, it’s unlikely that any builder will choose extra FAR at the current higher costs. It’s important to realise that increased development will only result in more revenue for the government in other forms, such as property taxes and development fees, not only premium FAR fees,” says Mani Rangarajan, Group COO, Housing.com, Makaan.com and Proptiger.com.

A majority of developers have welcomed the Karnataka government’s move.

Akshay Taneja, MD, TDI Infratech, says, “While FAR increases the likelihood of greater space utilisation, housing stock should ideally rise; this will result in the fulfilment of the existing demand and the creation of new ones, resulting in an increase in real estate supply, which will eventually lead to price reductions, encouraging even more demand.”

Developers, however, also want other states to follow suit.

Amit Modi, Director, ABA Corp & President (Elect), CREDAI, Western UP, says, “The Karnataka government has taken a prudent step of raising premium FAR, and we hope that other states will follow suit. Apart from raising the government’s revenue, such a move would also help increase market supply. Housing for All has necessitated the construction of high-rise buildings around the country. Rapid urbanisation has already put a strain on limited land resources, particularly in metropolitan areas. Extra FAR would assist developers in adding additional storeys and closing the demand-supply gap.”

“The FAR should be increased in other states also. Haryana’s more developed cities, such as Gurugram, will benefit from increased residential units due to well-maintained amenities. Not only should the FAR for residential constructions be increased, but also for commercial real estate to allow for more offices and commercial units; this will help in increasing the government’s revenue also through turnovers, taxes, and other means,” says Kushagr Ansal, Director, Ansal Housing and President, CREDAI HARYANA.