Hyderabad Needs FSI Limit For Its Healthy, Sustainable Development

Experts opine that this is the right time for the Telangana government to impose FSI limit in the city. There is an excessive inventory in both commercial and residential real estate. That’s the prime reason why new project launches have come down drastically. So, it’s easy for the Revanth Reddy government to bring in FSI limit and implement it forthwith

In two successive years, 2015 and 2016, Hyderabad witnessed record prices for lands in a series of electronic auctions conducted by then newly-created Telangana State Industrial Infrastructure Corporation (then TSIIC, now TGIIC).

Around that time, I asked a real estate developer why his company paid such a hefty price for the land in the Hi-tech City area and how he would recoup the investment. He cited unlimited Floor Space Index (FSI) as the prime reason for shelling out a humongous amount (in those days, of course!) for the land.

“As there is no limit on floor area that we can build on that land, sky is the limit for us. We will go for a high-rise building and easily recover our investment,” was the optimism with which the developer justified the high price he had paid for the land.

What is FSI? Floor Space Index is the ratio of the total built-up area to that of the total area of the land parcel or plot on which it has been built. In some areas, this is also called Floor Area Index (FAR). To arrive at this ratio, the total floor space of the building is divided by the size of the plot.

For instance, if a building has a built-up space (all floors put together) of 87,120 square feet and the plot on which it has been constructed is one acre (43,560 sft) in size, the FSI works out to two. We get this after dividing 87,120 sft (building size) by 43,560 sft (land size).

FSI limit is essential for a planned and healthy development of a city or an urban area. It also regulates population and construction density. In India, most major cities like Mumbai, Bengaluru and New Delhi have FSI limits. The average FSI works out to be around 2-2.5 across these cities. Even if an FSI of 2.5 is allowed, the maximum built-up area that can be constructed on a one-acre site is around 1 lakh sft.

But sadly, Hyderabad is the only major Indian citythat offers unlimited FSI, an immediate bonanza for developers, but bane for the city in the long run. As a consequence, some developers are not even batting an eyelid to build 10 lakh sft on one acre of land. This works out to be an FSI of around 10! And it’s a dangerous trend as this could cripple the city’s infrastructure.

“Thanks to unlimited FSI, some developers are taking up several craziest real estate projects in Hyderabad. Its sheer nonsense to construct a high- rise building of 50, 60 floors when there is plenty of land available in all corners of the city. With that kind of projects coming up in a small locality, there will be a traffic nightmare. The burden on infrastructure will be huge and Hyderabad will turn into a concrete slum,” a real estate sector insider cautioned.

Moreover, unlimited FSI is the reason why land price in Hyderabad skyrocketed to Rs. 100 per acre in the 2023 land auctions.

For some inexplicable reasons, Rajapushpa Properties bought 3.6 acre of land in Neopolis layout in Kokapet for a mind-blogging Rs. 362 crore, which worked out to be a little over Rs. 100 crore per acre. This price is unimaginable for a city like Hyderabad, which was the most affordable place for home buyers among all metros five years ago. It is basically due to this kind of overhype that Hyderabad is now the second most expensive city for home buyers in India. A study by global real estate consultant Knight Frank revealed that Hyderabad stood second (2nd most expensive)in its Affordability Index for residential segment after Mumbai.

The study was carried out in the top eight Indian cities during the first half of this year. As per this index, even New Delhi is cheaper than Hyderabad. If this is not killing the golden goose of Telangana’s economy, what is it then?

It’s high time that the Telangana government imposes FSI limits across the city for its sustainable development. This measure is urgently needed in areas that require horizontal expansion for reducing burden on the infrastructure. Further, experts opine that this is the right time for the Telangana government to impose FSI limits in the city. There is an excessive inventory in both commercial and residential real estate segments. That’s the main reason why new project launches have come down drastically.

According to a recent report by PropEquity, a data analytics firm, new residential project launches were down by a whopping 52 per cent in Hyderabad during the July-September 2024 period. There was a fall in commercial realty projects as well. So, it will be easy for the State government to bring in FSI limit and implement it forthwith in the City of Pearls.

Further, Chief Minister Anumula Revanth Reddy took up a good initiative by bringing in Hyderabad Disaster Response & Asset Protection Agency (Hydraa) to protect government’s assets and turn Hyderabad into a futuristic city devoid of encroachments.

Now, he should take up the initiative of bringing in FSI limits in the city, especially in the high growth area of its western part, comprising Nanakramguda, Kokapet and others. This will ensure that Hyderabad as a city will spread horizontally and not vertically, thereby easing the burden on infrastructure in key growth corridors.

Till now, Hyderabad is a place where everyone, every section of the society has a chance to make a happy living and have own dwelling. That will not be the case if this chaotic development continues. Moreover, the city will be out of bounds even for the middle class when it comes to buying a new house. So, Hyderabad requires an urgent FSI limit and it’s time the Revanth Reddy government acts on it. Will it do that without delay?