Encroachments – physical manifestation of informal sector – are the best example of uncontrolled growth. This article explores the role of physical environment (the formal sector) in the emerging form of encroachments (the informal sector). The article aims to identify meaningful relations between these elements of the formal physical environment and the emerging form of encroachments. Chaotic characteristics of encroachments pose challenges to the reductionist approach for a better insight. Conceptual inputs from complexity science offer an effective framework for analysing the same. A survey was done to document the physical environment representing formal sector and encroachments. The emerging form of encroachments is analysed based on concepts of complexity science. The identified determinants are found to be in hierarchical order, namely, socio-economic level, city level, area level and cluster level. The cluster-level determinants have individual properties acting concurrently, resulting into emergent property of physical environment, either encouraging or discouraging for encroachments. A comprehensive look reveals that the form of encroachments possesses a hidden order, which is derivative of identified determinants acting concurrently. The article highlights vital approaches in attaining design and management strategies, to aid the coexistence of the informal and formal sectors observed in the cities of developing countries.