MC Explains: Despite unrestricted FSI, the number of high-rises in Hyderabad is steadily declining

Experts pointed out that an unrestricted FSI will eventually lead to greater population density, thus denting the city's infrastructure.

Despite having an unrestricted Floor Space Index (FSI) in Hyderabad, (the only city in India that does not restrict FSI) the number of high-rise real estate launches in the city has shrunk by almost half compared to the pre-pandemic levels, according to data accessed by Moneycontrol.

Experts say this may be due to several reasons, including a homebuyers' shift in real estate preferences and rising construction costs in the city.

FSI is a parameter used in urban planning to determine the permissible construction density on a plot of land - which is - how much a developer can build on a piece of land.

According to data from real estate consultant ANAROCK, out of 138 project launches in the city in H1 2023, 33 projects (24% )are high-rises (G+10 Floors or above) compared to 2019, when of 53 launches, 27 or (51%) were high-rises.

In 2006, the Andhra Pradesh government introduced Government Order 86 that scrapped the FSI policy for real estate buildings, thus promoting high-rises in Hyderabad.

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The decline in the share of high-rises launches

Post-Covid Hyderabad real estate sector has grown tremendously, and experts point out that in some places real estate was even more premium than in Bengaluru. Most of the high-rises in Hyderabad are located in Kokapet and Puppalaguda localities in the western parts of the city.

However, data reveals that since 2019, the share of skyscraper launches in the city has declined steadily.

In 2019, out of 53 launches, 27 (51 percent) were high-rises. Out of 140 launches in 2021, 57 (41 percent) were skyscrapers. The share fell in 2022 when out of a total of 256 launches, only 72 or 28 percent were high-rises.

Real estate experts say, interestingly, the number of total launches or the supply more than doubled every year consistent with the change in homebuyers' demands.

Post-COVID, there has been a push towards more spacious homes, which are low-rise developments located slightly away from city centres. With more supply available, most of the demand has spilt over from the high-rise segment, according to architect Harsha Sridhar.

Unrestricted FSI also, however, increases the construction costs thus putting more burden on promoters and landowners - especially in a global recessionary market. Experts add that this may have also held back the developers who were riding their boom on unlimited construction before the pandemic.

"Several government orders, for example GO 168 (in 2012) have put restrictions on building height depending on the area or the road. For example, developers who are planning to develop around the 100-feet-road will have to follow the building bylaws," Samson Arthur, Branch Director – Hyderabad, Knight Frank India added.

GO 168 clearly states that the minimum plot size for any high-rise building should be at least 2,000 square metres. It also states that buildings close to major roads of 30 metres or more shall only be permitted after providing black-topped service roads with two lanes and a minimum of 7m width. It also puts the responsibility of providing (including costs) such service roads on the developer itself.

Experts demand FSI to regulate real estate

Sridhar pointed out that an unrestricted FSI will eventually lead to greater population density, thus denting the city's infrastructure.

"Every city should have FSI to control the unregulated boom in real estate. For example, in places like Hyderabad where land is available, the city is still growing vertically and not horizontally. This will put more infrastructural pressure on natural resources like water and energy," he said.

Analysing the carrying capacity of the land and sustainable planning is crucial for real estate to avoid flood and other infrastructural issues Bengaluru is witnessing today, he added.

Officials at Greater Hyderabad Municipal Corporation confirmed to Moneycontrol that though the government had mulled bringing some regulations, nothing has matured as of now.