Floor Area Ratio (FAR) - Explained - YouTube

Hello and welcome to the assetyogi.com

This is Mukul and in this video, I'll explain about FAR or floor area ratio.

What it means? how is it calculated? its role in urban planning?

and how it can affect real estate prices?

Make sure you watch this video till the end so that you don't miss on some useful insights shared in this video.

Let's get started now.

Floor area ratio is a technical term used in urban planning

that determines the total built-up space of a building.

total built-up space

of a building

on a plot of land.

Generally Floor area ratio or FAR

for a city or area is fixed by the government.

fixed

by government.

Based on various parameters like infrastructure, population

population growth.

You'll understand that in more detail as we go along.

first, understand what is floor area ratio is and how it is calculated?

By definition, the floor area ratio

is the ratio of a building's total covered area

to the size of the plot.

So this total covered area is the gross floor area

gross

the floor area of the building.

So if we've to write the formula for FAR or Floor Area Ratio

then it is

total

covered area

of all floors of the building.

all floors

divided by

the area

of the plot on which it is built.

So suppose the total covered area of all floors of a building is

20,000 sq feet.

And the area of the plot on which it is built is 10,000 sq feet,

Then here Floor Area Ratio is 2.

But generally, this FAR portion

this is fixed

by the government.

fixed by

government.

for a particular city or area.

And this FAR is used to calculate the

total covered area that can be built over a

plot of land.

So this is determined by FAR.

Now let us understand this in more detail with the help of this illustration.

So if the FAR of a place is 0.5 then in that case,

you can either build

one story over half of the land

let's say the land's area is 10,000 sq feet

and you're building this

left out a portion of 5000 sq feet and a built-up portion is another 5000 sq feet.

So in this case, you've built up on half portion of the land

and FAR becomes 5000

divided by

10000.

So this is one option for you

and you've another option you can leave the 75% of the land

which is 7500 sq feet

and you can build over

2500

sq feet, you can build two stories.

So if you calculate the FAR again in this case,

2500

into 2 stories

divided by 10000.

So in both cases, your FAR is 0.5.

Similarly, if the FAR is 2

of a place,

then by our example, suppose the land size is 10,000 sq feet,

10,000 sq feet,

so you can build two stories of 10,000 sq feet each.

So basically, if you calculate the FAR then it becomes 20,000

basically, 10,000 into 2 divided by

10,000

or otherwise, you can cover half the space

which 5000 sq feet is left out and

you build over 5000

sq feet,

so again your FAR is 5000

into 4

divided by

10,000

So again your FAR is 2.

So you've the option

to cover half of the land or cover the full land.

So if you know the FAR of a place then you can easily calculate the total covered area that you can build on a plot.

So for example, suppose the FAR of a place is one

and your plot area

plot area

is

2000 sq feet.

Then your total covered area

that you can build

covered area

will be 2000 sq feet.

But that doesn't mean that you can cover the entire

with one story,

for example, if this is your

plot

area

so you have the option

of building one story like this

and your FAR will be counted

as 1

but in most cases, you have to follow zoning and planning regulations.

zoning and

planning

regulations.

So some regulations may ask you to leave a

setback

then you may have to some space for the

parking

then there may be regulations on the maximum ground coverage,

that you can have on a plot of land,

and there can be height restrictions.

So in our example, if you have to leave the setback of 50%,

let's say this is your plot,

and you've to leave a setback of

25% in front and 25% in back,

let me draw it again

25% in back then in that case,

you can build

2 stories

like this.

I know the lines are not straight but I think you'll get an idea.

So you can build 2 stories of 1000 sq feet each

so 1000 into 2

so you'll again get a covered area of

2000 sq feet.

So I hope you've got an idea when you're constructing a building then you've to

comply with the FAR let's say it 2,

and also you've to comply with the

local zoning and planning regulations.

Now let us see what are all factors considered by the urban planning department,

to come up with a FAR for a city or area.

And we'll all see the impact of a high FAR or a low FAR in a city or an area.

So these are the major factor that helps the urban planning department to decide on the FAR

for a city or area.

So the first factor is the current population of the city or area,

so if the population of the city is high

then you'll find the FAR is also high.

So it means that the

governments want verticle development.

development

instead of more spread out development.

And similarly, if the population of an area is

growing at a very fast rate

if the population growth is very high

again

the FAR of that city can be increased.

Then infrastructure also plays a key role in deciding the FAR

for instance, if the current infrastructure is low

then you can not increase the FAR suddenly

so FAR is supposed to be kept low only.

Otherwise, there can be a huge stress on the transportation network

your water and power infrastructure etc.

Whereas, if the government already invested in the infrastructure

if the infrastructure is high relative to the population density

then FAR can definitely be increased.

And let's say the current infrastructure, current infrastructure I and the FAR is low

whereas, the population is growing at a very fast pace

in that case, the government will have to increase the infrastructure

and FAR can be increased

FAR can be increased

to accommodate the

high growing population.

So basically, when FAR is increased

the population density of a place increases

population

density

increases.

So what does it mean? let's see the impact of a high FAR,

So when the FAR of a city is high you'll see the verticle development and there will be

high population density.

So population density will increase.

Then there will be a huge stress on the infrastructure if the current infrastructure is low

so in that case,

infrastructure has to be increased.

Then high FAR means better profitability

basically in a high FAR area developers can build high-rise buildings in the same area.

So it improves their unit economics and profitability.

And since the profitability increases and the demand increases

it increases the land value also.

And another benefit of high FAR is better walkability in the city or area.

Because all the activities are concentrate

so you can access all facilities like schools, hospitals, railway stations,

quite nearby and the distances are not very long.

Now let us quickly understand the impact of a low FAR also

So a low FAR means a lower population density

better per capita infrastructure

which means there will not be much stress on the current infrastructure

on the transportation networks, water, and power infrastructure.

Then low FAR also means reduced profitability for developers,

basically, high-rise can not be built

so it reduces the unit economics and profitability for the developers.

And it also means low land prices

because high-rise can not be built

and in low FAR areas, you'll find bigger houses because people can

afford larger house generally.

Then in low FAR areas, walkability is an issue,

generally, you'll find more spread out development and

travel distances are quite long.

I hope after watching this video, you now understand what is Floor Area Ratio

and you can easily calculate the total covered area that can be built over a plot of land.

And you'll also understand the impact of a low FAR and high FAR in an area.

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