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08 November, 2023
When you plan to invest in real estate or try to get familiar with the terminologies associated with the industry, you will come across the terms FSI or FAR. Both these terms refer to the same element, as FSI (Floor Space Index) or FAR (Floor Area Ratio) is the maximum permitted area on which developers can carry out construction on a piece of land. FSI in real estate denotes the floor area covered under the available land area. FSI is usually set on the National Building Code. Local or municipal bodies regulate it, and sometimes it is governed by the state authorities. The National Building Code of India provides certain guidelines for activities related to the construction of buildings across the country.
FSI indicates how popular a location is for construction, along with its population density. It is important to know the FSI from the environmental perspective, too. If the FSI is high, the available spaces will be fewer.
FSI is the same as FAR, but they are denoted in different ways. For instance, FSI in real estate is expressed as a percentage, while FAR is expressed in decimals. The FSI tends to vary between different localities and cities. Even if the location remains the same, FSI can vary based on the number of floors in a structure. Therefore, the type of building, the zoning inside cities, and other amenities determine the FSI.
Before any project is constructed, builders need to furnish the details of the proposed building to the respective authorities for approval. These details tell whether the property is commercial or residential, the structure and height of the building, the land area on which the building is being constructed, and other aspects.
The FSI may be impacted by different factors, but the location is the primary determinant. In metro cities, the lack of space leads to a higher FSI. In rural areas, the FSI in real estate tends to be low as substantial amounts of land are available for builders to construct projects.
Certain authorities also calculate higher FSIs if the size of the plot is large. If a plot is located close to a road, the FSI may be higher considering the width of the road. Considering the overall plot area and built-up area, one can determine the FSI using a formula.
You need to consider the total floor area on every floor of the building along with the overall plot area of the land in order to calculate the Floor Space Index (FSI) or Floor Area Ratio (FAR). You can calculate it using the following formula:
In case the value of FAR is lower than 1, it means that the plot cannot be used. It implies that a portion of the land doesn’t have any construction and is empty. On the other hand, if the value of FAR is more than 1, it indicates that the same plot has multiple storeys on it.
To help you understand how FSI in real estate is calculated, let’s take an example.
Suppose, you have a plot measuring 1000 Sq. Ft. On this, you are supposed to build a structure of 2000 Sq.Ft. The formula mentioned above will involve the following figures:
FAR= 2000 / 1000, which comes to 2
With the FAR reading 2, the FSI will be 200%. This implies that you can construct a building measuring 200 Sq.Ft. on a plot measuring 1000 Sq.Ft.
While determining the FSI in real estate of a particular locality, the municipal council factors in different aspects along with the width of the road.
The value of the FSI determines the value of a land in a specific locality. This value denotes the portion of land that can be used and if the builders can carry out a multi-storey construction. The FSI value changes from one locality to another, and also between areas. Depending on the number of levels, this figure also keeps changing.
With the FSI, it becomes easy to ensure a planned development and carry out a disciplined construction. It is applicable in every sector, including residential buildings, commercial buildings, and railway stations. This ensures a clear distinction between open spaces and construction spaces. The FSI also determines the areas where builders cannot carry out any authorized construction. In this way, it keeps the number of unauthorized constructions low.
Builders need to consider FSI while constructing different projects. They find higher FSI beneficial since this indicates that they can construct and sell more space in a particular project. This also factors in the affordability aspect. In locations where it is important to provide housing for all, this factor comes in handy. A lower FSI means that a lesser area on a particular plot can be used for construction. If the builder constructions the project as per FSI, chances of legal hassles are low.
If you are willing to increase your FSI limit in an area where the FSI is low, the concept of premium FSI comes into play. You need to shell out some extra charges to increase the limit from the original FSI which was permitted. This amount which you fork out is called the Premium FSI Fund. It is applicable if the adjoining road beside the land comes with a width of at least 30 feet.
Considering that you have a road 30 to 40 feet wide around the plot, you are eligible to get a premium FSI of 20%. This implies, you can build 20% more than the permissible FSI in real estate. So, if the width of the road is 40 to 60 feet, the premium FSI will be 30%. This can be as high as 40% for plots that are located around roads at least 60 feet wide.
Let’s take an example to understand how premium FSI is calculated.
If the plot measures 2000 Sq. Ft. and the FSI is 2, you are eligible to construct a building measuring a maximum of 4000 Sq. Ft. on the plot. Now, if this plot is located on a road 50 feet wide, you can get a premium FSI of 30%. So, you can capitalize on the provision to construct an additional 1200 Sq. Ft. of space on the same plot. Therefore, the building can be of maximum 5200 Sq. Ft. on this plot.
To help you understand the concept of premium FSI in real estate better, lets’ take another example.
Suppose, you have a land measuring 1000 Sq. Ft. on a road 70 feet wide. Here, the FSI is 1.5. So, you have the provision of building a 1500 Sq.Ft. property on it. Now, considering the width of the road, you can get a premium FSI of 40%. As per the calculation, you can include 600 Sq. Ft. of additional space on the same plot. So, the overall property space you can build on the plot is 2100 Sq. Ft.
Now that you have understood what is FSI in real estate, let’s take a look at these figures in different cities in India. This will help you plan your property purchase in various places.
In Bangalore, the localities have been categorized into three groups. These are Intensely Developed, Moderately Developed, and Sparsely developed. The FSI and FAR values range from 1.75 to 3.35 depending on the respective category.
In the coastal city of Chennai, the FSI and FAR ranges between 1.5 and 2. As per the Chennai Second Master Plan, 2026, a score of 1.5 is assigned to low-rise buildings, while high-rises get 2.
This city is yet to impose FAR on group housing. According to the last Master plan, the FAR ranges from 1.2 to 3.5. For plots having a direct impact due to the development of the metro, the governing body has allowed a higher value for plots.
In Gurgaon, the Haryana Urban Development Authority has assigned an FSI value between 1 and 1.45. In the industrial setup, the maximum FSI can be 1.25.
In Ahmedabad, the FSI ranges from 1.2 to 1.8. In central localities, it is fixed at 1.2. In the outskirts of the city, the FSI value is 1.8.
In Pune, the FSI ranges from 1.5 to 2.5 according to the Draft Development Control Regulations for Development Plan. For slums, the authorities allow the figure to go up to 4 and sometimes as high as 5.5.
There are two segments in Mumbai, the Suburb and the Island City. The former has an FSI between 0.5 and 1, while the FSI is 1.33 for the latter. For plots under the Maharashtra Housing and Area Development Authority, the value is fixed at 2.5.
In Hyderabad, there is upper cap imposed on FSI. So, the average FSI in this city ranges from 6 to 7. Therefore, it is capable of optimizing as much space as it can.
In Kolkata, the FSI ranges between 1.5 and 2.5 as per the New Town Kolkata Building Rules of 2009. This figure depends on different factors like the width of the road, use of land, and density of the plot.
FSI in real estate stands for Floor Space Index in the construction sector. It is known as Floor Area Ratio as well. This is the maximum permitted areas on which a developer can build a structure on a particular land. The value of FSI depends on different factors, and is determined by the state government or municipal authorities.
The FSI in a particular area depends on several factors, determined by the bylaws set by the governing authority in a city. It also depends on the location, size of the plot, availability of amenities like water, power, and sewer lines, width of the road adjacent to the plot, and the type of the building. Therefore, the FSI for a commercial building will be different from that of a residential one.
No, the FSI calculation doesnt include car parking space. Remember, when you calculate the FSI, exclude common spaces, parking areas, and interior open spaces as well as basements which you use completely
The carpet area of a property doesnt technically include terraces, balconies, lobbies, and lifts. Therefore, they are excluded from FSI. Now, you need to consider whether or not the staircase is located inside the apartment or outside it. If it is located inside, the FSI will include the space covered by the balcony.
As you know FSI in real estate indicates Floor Space Index. On the other hand, the term Transfer of Development Rights is abbreviated as TDR. The latter has to be obtained in the form of certificates from the owner, who can use them to trade the property in the market for a return.
FSI plays a critical role in urban planning by indicating the density and land utilization in a city. It helps in managing space effectively and guides the development of infrastructure, residential, and commercial properties. It's a key tool for maintaining a balance between construction and open spaces in urban areas.
FSI has a direct impact on property prices in different localities. In areas with higher FSI, property prices tend to be higher due to the increased potential for constructing larger and more valuable buildings. On the other hand, areas with lower FSI may have more affordable property prices, but the supply of space tends to be limited.