How to calculate FSI in Real Estate
FSI is an important concept in both real estate and construction.
Whether you are buying a property or considering a real estate investment, understanding the related jargon can help you make an informed decision.
So then what do you mean by FSI? Well, here’s a guide to help you understand FSI better.
What is the full form of FSI in real estate?
FSI stands for Floor Space Index in real estate and construction. Sometimes it is also referred to as Floor Area Ratio or FAR.
In construction business, FSI is the maximum permissible floor area on a plot or piece of land, on which a developer can construct. If you’re a developer or investor, you get permission for a certain area only on which you build. Thus, FSI is of utmost importance in the construction and real estate business.
How to calculate the FSI or Floor Space Index of a Plot
Floor space index is defined as the ratio of the building floor covered area to the area available on the land. Therefore, this is the simplest way to calculate FSI:
FSI = total covered area of all floors / total plot area
Area of all floors = FSI × Total plot area
Here’s an example to further simplify the concept of FSI:
A plot of land measures 1000 square metres. The permissible floor space index is 1. Then you are allowed to do construction on 1000 square metres of the plot.
A note: Calculating FSI can be challenging. This is because FSI may exclude basements, lifts or shafts etc depending on the laws and regulations of the city. For instance, Mumbai laws do not count the basement parking area in the floor space index. Studying the laws and the fine print of a particular region will give you a better idea of how to calculate FSI for real estate.
Factors affecting FSI
The floor space index or FSI depends on the following factors primarily –
- Plot size
- Type of building (residential, commercial etc)
- Location of plot or project
- Amenities available (water, electricity, etc)
FSI can be revised depending on the value of the land. So for instance, if you’re buying a plot in a semi-urban location, the FSI will be different as compared to a plot in a metropolitan area.
Why FSI is important for real estate investors
Floor space index impacts the construction of a building. How then is it important for a real estate investor? Well, as an investor, one needs to make educated decisions. Knowing the FSI of a plot lets you invest in properties that adhere to government regulations.
Moreover, there are rare exceptions when the builders or developers wish to extend the limit of a given FSI. In this case, the municipal body or local body is paid for an additional area. This is known as Paid Floor Space Index.
The bottom line
FSI is an important aspect of property planning. By default, it becomes an important aspect of real estate investment. Whether you’re looking for a home or a financial instrument, understanding the concept of FSI can impact your real estate investments.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
