The Narendra Modi government on Monday scrapped Article 370 and Article 35A of the Indian Constitution which gave “special status" to the state of Jammu and Kashmir (J&K). After the announcement, the state has now been bifurcated into two union territories. Now that Article 35A has been revoked (a law that debarred non-residents from buying properties), will it open doors for non-Kashmiris and outsiders to invest in immovable property within the union territory?
Article 35A gave J&K government the right to decide who qualifies as a permanent resident of the state and only these individuals were allowed to acquire or own land, settle and seek government jobs in J&K region. This means non-Kashmiris and the rest of the country did not have the right to invest or buy immovable property or even settle down in the state. However, revoking Article 35A would most likely open gates for real estate investments in J&K from across the country. “It is too early to predict the real impact of abolishing Article 35A on Kashmir’s real estate market. It is a highly sensitive region and it will take a long time for all the ambiguities to clear up. The fact that the region has been an area of contention for decades will keep any parties interested in investing there in wait-and-watch mode. Much depends on how the political scenario there unfolds," said the chairman of a leading property consultancy firm who did not want to be named.
Experts said that the real estate activity has been very limited in the J&K region since the state has always been in a vulnerable situation due to conflicts between India and Pakistan. Until now, non-residents were not allowed to purchase property and hence, investors never gave it a second thought. “Even with the scrapping of Article 370, this region will remain politically contentious for quite a while, and this fact will keep any investment sentiment in abeyance until much more clarity and certainty emerges," said the chairman quoted above.
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Shubhranshu Pani, managing director-retail services at JLL India said, “We have shopping centres in Jammu and what we’ve seen is, as soon as there is a spark of any violence or disturbance, it is the shopping centres that are shut first. After this move (revoking Article 35A), Jammu will hopefully get a fresher life but I am not very sure about Kashmir."
Pani said that there are enough people in the state who’ve been very cautious about investing in real estate because the militancy and the political scenario are not very favourable. “Before the outsiders, I think it will be the residents of the state who would like to take the advantage first and will perhaps not be afraid of investing anymore," said Pani.
Experts we spoke to also said that it would take some time for investors to gain confidence in J&K. For now, only those people who are okay with taking risk and see potential in the region will take the plunge. “I think it will start off with developers typing up with established local players to build the ecosystem. This is how most cities and states grow. I see it as a great opportunity for localites first," said Pani.