High FSI Levels Can Spur Affordable Housing In India
Mumbai, the business capital of India, will soon embrace higher Floor Space Index (FSI) for real estate construction projects, according to an announcement by the Brihanmumbai Municipal Corporation (BMC) last month. American journalist Matthew Yglesias has called the proposal the most important urban policy story in the world. This is by no means an exaggeration.
In an over-crowded city bursting at the seams with an ever-growing migrant population, space comes at a premium. A significant portion of Mumbai's population lives in urban slums; many cannot even live in the city because real estate developers cannot build residential projects into the sky.
What stops them? The answer is Mumbai's low FSI.
FSI is the ratio of the built-out floor space to the land area. The FSI in Mumbai is now 1.33 for the island city, and 1 for the suburbs. This is unusually low for a city with a metropolitan area population of 20.7 million. Not surprisingly, thus, the living spaces are extremely congested in Mumbai. An average Mumbaikar has 48 sq ft of residential space. This is lower than the 60 sq ft minimum space specification for the prisons in the United States, as argued in a Times of India report in November 2008. No global city has an FSI that compares to such stringently low levels.
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The low FSI in Mumbai has often earned support of many urban development experts, who argue that Mumbai's existing infrastructure cannot support the vertical growth of the city. Many also argue that raising the FSI levels will raise the built-up density and the population density in Mumbai. But, Mumbai already has the greatest built-up density in the world. Raising the FSI will not change this. It will merely raise the floor space per person, says an urban policy paper from former World Bank consultant Alain Bertaud.
However, the low levels have only contributed to the rising real estate prices and forced economically weaker sections to move out of the city. Many others live in the slums, or sleep on the sidewalks. Besides urban poverty, low FSI is one of the reasons that housing in affluent Mumbai still remains a pipedream for many.
What will an increase in FSI levels mean for Mumbai?
Brihanmumbai Municipal Corporation has proposed raising the FSI to a range of 2 to 8. If this materializes, the slum dwellers and the homeless will be able to afford formal housing, argues the paper from Bertaud.
Let's see how.
By doubling or tripling the FSI, we can house twice or thrice as many people in the same plot of land. For instance, when the FSI is doubled or tripled, a 20-story or 30-story apartment building can be built where the local laws currently restrict the floors in buildings to 10 stories.
The argument for higher FSI levels in Mumbai finds support in examples from other global cities with admirable housing standards. All the cities in the world with a population of more than 5 million have higher FSI levels, often even higher. In Asian cities such as Singapore and Shanghai, the FSI levels are many times higher, even up to 20. In China, it seems that there are no such restrictions and the real estate developers can build skyscrapers.
Economic reasoning makes the support for higher FSI levels sound all the more persuasive. Any hike in FSI levels and subsequent rise in the number of high rises will lead to a fall in home prices as the supply of homes will go up. In other words, higher FSI levels can spur affordable housing in India. The rental rates will fall too.
This might have other indirect effects - people may no longer be restricted to buying homes only in Mumbai's suburbs and suffer a long commute to work. Buying houses next to workplaces may contribute to mitigating highway congestion and fatalities.
The Narendra Modi led government wants every Indian to own a house by the year 2022. The changes in FSI for Indian cities might just be the key to achieving the goal.