FSI – ITS MEANING AND IMPORTANCE IN REAL ESTATE

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Investing in real estate can be very rewarding. It is one asset that everyone invests in at some point or the other. Like all other sectors, investing in real estate requires certain knowledge about the field in itself. Awareness of various concepts, abbreviations and policies in real estate is mandatory for the perfect deal-making. Today we go ahead and try to decipher the term “FSI”. It is an essential data of any constructed property, be it for residential or for commercial use. FSI determines the space and cost of a property. Here we attempt to understand the term more elaborately.

FSI stands for Floor Space Index, also sometimes referred to as Free Space Index and Floor Area Ratio. It simply indicates the ratio between the area of building floor to the area of the plot / property on which it is constructed. One can predict the maximum permissible floor area on which construction can take place in a particular property with the knowledge of its FSI. It also helps to determine the number of floors a building can have. FSI is not the same in every place. It is set by the government or authorities of the specific place, and hence varies from one region to the other.

One can easily determine the total built-up area with a simple calculation. If the total plot area is 1000 square metres; and the Floor Space Index (FSI) is 1, the total area on which construction can take place is 1000 square metres. The FSI keeps changing with time and place. Hence, it is not static like the other variables. There are many factors that determine the FSI of a specific place. Some of the major ones include location of the property, its size, the type of building that is to be constructed, the amenities that are to facilitate the building and so on. The FSI of a plot located in an already developed city would vary from that in a developing city, such as Bengaluru and Hyderabad.

Floor Space Index indicates the market value and demand of a property. FSI is regulated by authorities as per the need for development in the particular area and the price of the land. Mostly local government bodies determine the FSI of the area it is responsible for. This is however, not a fixed criteria. If any developer wants to go over the fixed FSI limit, they can seek permission by the authorities. In that case they have to pay an additional fee. This scenario of extending the referred FSI with the payment of additional fees is known as Premium FSI.

Indian cities with the highest FSI include Ahmedabad, Bengaluru, Delhi, Gurgaon, Hyderabad, Mumbai, Noida and Pune. The reason behind this is the enormous demand of property in these cities. Good infrastructure, presence of employment hubs, well-established connectivity and so many other criterias come into play here. Property is a big-time investment and a lifelong asset. Only adequate knowledge can favour a good investment. FSI will always be an essential component of property planning and buying. It is hence a necessity for us all to be aware of this small yet important piece of detail.    

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