Earthquakes and Urban Transformation
Where Does Transformation Gain Come From? Unused Zoning Entitlement
Why does one building in the same neighborhood grow in transformation while another shrinks? The difference between existing floor area and a parcel's zoning entitlement, and its effect on sharing.
3 min read
In urban transformation, will an owner's unit get bigger or smaller? The answer to this depends neither on the contractor's goodwill nor on negotiating skill; it depends on the parcel's zoning entitlement and how much of that entitlement the existing building already uses.
Two numbers: construction entitlement and existing floor area
A parcel's construction entitlement is the parcel area multiplied by the floor area ratio (KAKS): on a 1,000 m² parcel with a ratio of 2.00, 2,000 m² of gross floor area can be built. The existing floor area is today's building's footprint multiplied by its number of floors. The gap between the two is the entitlement sitting 'unused' on the parcel.
| Situation | Existing building / entitlement | What happens in transformation? |
|---|---|---|
| Unused entitlement available | Below 85% | The new building grows; most of the contractor's share comes from the added floor area, and units are kept the same size or grow |
| Entitlement fully used | 85% to 115% | The new building stays about the same size; the contractor's share comes directly out of the owners' area, and units shrink |
| Above entitlement | Above 115% | Built under an older plan or with an unpermitted floor; the new building shrinks, and the loss falls on the owner |
Why are some old buildings considered 'gold'?
If a 3 to 4 story apartment building from the 1960s-80s sits on a parcel with a floor area ratio of 2.00 to 2.50 today, the new building will gain nearly two floors' worth of extra area. The contractor takes their share from this added area, and owners get a new unit that is often larger, too. In the same neighborhood, a 7 to 8 story building from the 1990s that already used its full entitlement has no extra area to distribute; each owner has to give up part of their unit to the contractor.
The gross-net difference
Zoning entitlement is gross floor area, including walls, shafts and the stairwell. Your unit's area on the deed or in a listing is usually net. Comparing the two directly overstates the growth: going from gross to net typically reduces area by 15 to 22 percent. When doing the math, compare the new unit's net area with your current net area.
What can be done on a parcel with a full entitlement
- Cash top-up: Owners pay the contractor to keep their unit instead of giving up land share.
- Owner-financed construction: Owners finance the construction themselves and the contractor acts only as the builder; no share is given.
- Plan amendment: In some areas, extra floor area ratio or height has been granted for transformation; ask the municipality for the current plan notes.
- Consolidation with neighboring parcels: Merged parcels need less area for setbacks and yield a more efficient building.
This content is for general information only and is not a substitute for legal, financial or tax advice. Rates, amounts and legislation can change over time. Confirm current information with the relevant authority or a professional before proceeding with a transaction.