After Urban Renewal, Buildings Are Taller and Have More Units—Why Can't You Exchange 1 Ping for 1 Ping? Experts Reveal 5 Key Reasons: No Wonder There Are So Many Holdout Residents

Let’s examine how the floor area of buildings in urban renewal projects is calculated. I will explain each factor in detail so that everyone can gain a clear understanding.

Below is the formula for calculating the “allocable floor area for property registration” in urban renewal:

(Land area held) × (Statutory floor area ratio) × (1 + Incentive floor area ratio) × (1 + Non-counted floor area coefficient) × (Allocation ratio)

1. Land Area:

Each land parcel undergoing urban renewal has unique development conditions, so allocation terms naturally differ. For example, a neighboring renewal project might have originally consisted of single- or two-story townhouses with larger land holdings than four- or five-story apartment buildings, resulting in better return conditions for townhouse owners.

Most urban renewal reconstruction projects involve apartment buildings over 30 years old. Under the regulations at the time of construction, in a residential zone, a 200-ping land parcel could build up to 60 ping per floor. Dividing a 60-ping floor in half results in two 30-ping units per floor.

For the same 30-ping unit size, the land area held per household varies depending on the number of floors built. If a five-story building is constructed, a 100-ping land parcel is shared among ten households, so each holds 10 ping of land. If four stories, the same 100 ping is shared among eight households, so each holds 12.5 ping. If three stories, the 100 ping is shared among six households, so each holds 16.7 ping.

By extension, if only one or two stories are built, the land area held per household increases further. The actual area depends on how it is registered on the title deed; the above is a simplified estimate for easier understanding. All else being equal, the larger the land area held, the more floor area can be built.

2. Statutory Floor Area Ratio:

Urban land is zoned for different uses, such as commercial, residential, public facilities, and road use, each with different development intensities—known as the “statutory floor area ratio.” The higher the ratio, the more floor area can be built and the stronger the development intensity.

For example, Taipei City’s Third Residential Zone has a statutory floor area ratio of 225%, meaning one ping of land allows 2.25 ping of building area. The Fourth Residential Zone has a ratio of 300%, allowing 3 ping of building area per ping of land.

Why do different residential zones allow different development intensities? Because different areas have varying capacities for public services—such as schools, police, and fire departments—to support the local population. Higher floor area ratios correspond to higher public costs, making floor area ratios a public resource.

Before Taipei City adopted floor area ratio regulations in the 1990s, building height was determined by building codes based on the width of the road in front of the site. Thus, some residents still think in terms of pre-1990s height rules. Today, every land parcel’s zoning and floor area ratio can be clearly checked.

3. “1 + Incentive Floor Area Ratio”:

Even with full resident approval, urban renewal and aging building reconstruction projects require an additional six months in the review process. Why do people accept this time cost? The answer is to gain extra “floor area incentives,” securing higher development rights and more floor area. The “1” in the formula represents the original statutory floor area.

Before the 2021 legal amendment (Year 110 of the Republic of China), floor area incentives averaged 1.3 times (130%) of the statutory ratio. After the amendment, incentives can be clearly determined based on site conditions, specifying how much bonus is granted for each application item. For example, applying for green building incentives, Diamond Level grants 10%, Gold 8%, Silver 6%, and Bronze 4%.

The government offers floor area incentives to encourage redevelopment with public benefits. Nationally applicable incentive items include “timely implementation (encouraging communities to complete integration quickly),” “providing social welfare or public facilities,” “assisting in acquiring and developing public facility land,” “barrier-free design,” and “green buildings.” Local governments can set their own incentive rules based on urban development characteristics. For example, Taipei City offers incentives for “rainwater runoff suppression facilities,” “assisting in repairing sidewalks or covered walkways on adjacent land,” “providing charging parking spaces,” and “setting up pedestrian walkways.”

4. “1 + Non-counted Floor Area Coefficient”:

As building regulations are updated annually, new buildings are required to include more public facilities. For example, old apartments may have only one staircase, while new high-rises require at least two staircases and smoke exhaust rooms to ensure fire evacuation.

Landowners may feel their development rights are compromised by these mandatory facilities. To protect both safety and development rights, the government designates these spaces as non-counted floor area. Although these areas (lobbies, mechanical equipment rooms, emergency elevators, smoke exhaust rooms, air-raid shelters, etc.) are not included in the floor area calculation, there are upper limits on their proportion to prevent excessive inflation. The higher the non-counted coefficient, the higher the common area ratio (commonly known as “common area ratio”), and the two are positively correlated. The coefficient value depends on factors such as site size and architectural design.

The non-counted floor area coefficient is also known as the “building ownership registration area coefficient” or “sales ping coefficient.” In simple terms, it represents the proportion of common facilities (e.g., elevators, stairs, corridors, management committee rooms, parking lots). Coefficients range from 0.55 to 0.7 or 0.8. A higher coefficient means a higher common area ratio. For example, with a coefficient of 0.7, 1 ping of usable area and 0.7 ping of common area make up 1.7 ping of registered area—a 41% common area ratio.

5. Allocation Ratio:

Whether residents and developers split the return 6:4, 5:5, or 52:48 depends on the total reconstruction cost (shared burden). Even with the same material quality, construction unit costs vary by site scale. Like bottled water at convenience stores, smaller bottles usually have a higher unit price. Construction costs follow the same principle—economies of scale apply.

Since the allocation ratio depends on reconstruction costs, but costs are in “money” while residents receive “space,” a key factor—“property price”—is needed to convert between the two.

In high-property-price areas, fewer pings are needed to offset reconstruction costs (cost-offset payment), so residents receive relatively more floor area. For example, if reconstruction costs are 500 million TWD and the average property price is 1 million TWD per ping, then 500 ping of space is used to offset the cost.

Note: Does the allocation ratio refer to floor area or value? For example, if area-based calculation returns 30 ping, a 30-ping unit on the 4th floor differs in value from one on the 8th. If a resident wants to switch from the 4th to the 8th floor, how is the difference calculated? For rights transformation projects, refer to the selection principles. For joint development agreements, follow the contract or negotiate with the developer.

Thus, post-renewal buildings have more floor area due to incentive and non-counted floor areas. However, after cost-offset payments, residents may not receive more area than before. By analyzing the five elements—land area, statutory floor area ratio, incentive floor area, non-counted floor area coefficient, and allocation ratio—one can estimate the return area. But reviewing each element reveals that “land area doesn’t increase,” “statutory floor area ratio is fixed,” and “incentive and non-counted ratios are nearly constant.” Only the allocation ratio offers room for change.

The key to the allocation ratio lies in how much floor area must be offset to cover reconstruction costs—the key factor being property price. Simply put, the amount of return area depends on property price.

Why does the neighboring renewal project have better terms? The answer again lies in the five elements. If your pre-renewal unit and your neighbor’s were both 30 ping, but they held more land, their return area would naturally be larger. Or, even if separated by just an alley, their land zoning might differ, resulting in a higher statutory floor area ratio.

Alternatively, larger development scale might allow more incentive floor area, a lower non-counted coefficient, or lower construction costs (e.g., mechanical parking due to site constraints, which is more expensive per unit). Sometimes, simply due to rising material costs, more area must be offset, reducing the return area.

Urban Renewal Advisor’s Tip:

The core of urban renewal allocation is “cost-offset payment,” which in turn depends on future property price estimates. Reconstruction costs are “shared burden,” with construction costs being the largest component, about two-thirds. Construction unit prices vary by site scale, material grade, structure, and location—just like two bottles of the same brand of mineral water, where the smaller bottle usually has a higher price per milliliter!

The conversion between “non-counted floor area coefficient” and “common area ratio” is: 1 − [1 ÷ (1 + coefficient)] = common area ratio. For example, a coefficient of 0.5 gives a 33% common area ratio; 0.8 gives 44%.

Fun Fact: What is the unit of land area?