Aloysius Xavier Lopez
Gazette notification is expected shortly; it will permit builders of new projects in CMA
“It is too early to forecast the impact of permitting premium FSI on prices of housing units in Chennai”
Premium FSI would not have a great impact on prices of residential projects: senior official
CHENNAI: The recent government order permitting premium FSI in the area falling under Chennai Corporation, 16 municipalities, 20 town panchayats and 214 village panchayats in Chennai, Tiruvallur and Kancheepuram districts is expected to have a marginal impact on end users.
The gazette notification is expected shortly and the move would permit builders of new projects in CMA, excluding the Red Hills catchment area and areas adjoining water bodies maintained by the Chennai Metropolitan Water Supply and Sewerage Board for drinking water purpose, to construct extra floor space on payment of a premium.
Impact on prices
“It is too early to forecast the impact of permitting premium FSI on prices of housing units in Chennai,” said Vikram Kapur, member secretary, Chennai Metropolitan Development Authority (CMDA).
There could be a marginal reduction in cost of housing units in new residential projects if the market value is higher than the guideline value, said R. Kumar, Managing Director of Navin’s.
But buyers of the residential projects making use of the provisions of premium FSI would have lesser undivided share of land when compared to the projects which did not seek premium FSI, he added. The premium paid does not bring anything tangible.
Mr. Kumar said in cases of the guideline value becoming higher than the market value of land, the premium FSI would be detrimental to the end user.
One of the advantages for developers would be the possibility of increasing the number of housing units in locations where land is in short supply, said Prakash Challa, president of the Confederation of Real Estate Developers’ Associations of India-Tamil Nadu.
Tougher for builders
It would be tougher for the builders to convert the advantage of the premium FSI provisions into a reduced price of the housing units as they would have to pay the cost of the land before the planning permission is granted, said M.K. Sundaram, secretary of Construction Industry Development Council-Chennai.
Both government and the developer would get their share leaving the buyers without much benefit in terms of the selling price of the apartment. Rather the premium FSI indirectly benefits those who develop and retain for commercial purposes, he added.
A senior official of CMDA admitted that the premium FSI would not have a great impact on prices of residential projects but added “We do not want to encourage premium FSI on a large scale. We want to have it as a pressure valve in urban development of the CMA.”
The official said they just wanted premium FSI as a better mechanism to control compulsive violators who are particular about building at a particular location.
The minimum width of roads for getting higher FSI at a premium is 30 feet and the permissible premium FSI increases with the width of the road.
Mr. Sundaram said premium FSI should have been permitted only in areas with wider roads, better drainage and water supply. But allowing in narrow roads will lead to traffic congestion, parking problems, drainage over flow, shortage of water and power. The density of the population will only increase without any improvement in the existing basic infrastructure available, he adds.
A CMDA official clarified that the premium FSI is only for extra floor area but the set back and parking norms have to be complied with.
Stakeholders say the premium FSI should have been permitted outside the city limits and the premium amount collected by the government for granting additional FSI should be spent on developing the same area without diverting the same for any other purpose.
The introduction of premium FSI should not contribute to unwarranted escalation of land prices as similar initiatives had earlier fuelled speculation, said Ramesh Nair, Managing Director-Chennai, Jones Lang LaSalle Meghraj. “If that happens it may affect buyers.” he said.