Now that Article 35A, a law that debarred non-residents of Jammu and Kashmir from buying properties in the erstwhile state, has been revoked, people from other states can own immovable property in the newly carved Union territory.
However, there’s not much clarity on how the move will pan out for investors. Two days after Article 35A was scrapped, BJP leader Nirmal Singh said the Union government, in all probability, will propose a domicile-like option for J&K. This means that the interest of J&K residents will be protected by not allowing outsiders to buy agricultural land.
“Many people have dreamt of owning a house in J&K but because of the special status they were not able to do it. Now the market is open and the prices of real estate will go up in the region," said Gaurav Gupta, president, CREDAI Ghaziabad, an industry body and director, SG Estates, a Delhi-based real estate firm.
If you are indeed interested in buying a property in the UT, should you take the plunge already or should you wait it out?
The current situation
Experts Mint spoke to said it will take a long time for all ambiguities to clear up since J&K is a highly sensitive region. Anuj Puri, chairman, ANAROCK Property Consultants Pvt. Ltd, a real estate consultancy firm, said 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. He said a lot depends on how the political scenario unfolds over the next few months.
Real estate activity has been limited in J&K in the past as the region is vulnerable due to cross-border conflicts. “Even with the scrapping of Articles 370 and 35A, it will remain politically contentious for some time and this will keep any investment sentiment in abeyance until more clarity and certainty emerges," said Puri.
What lies ahead
While there is no clarity on how the government’s move will impact investments in J&K, experts expect property prices to spike over the next few months.
“A lot of developers will now indulge in property development. Segments such as holiday homes, rental housing, and office and commercial spaces will now prosper in the region. After a few months, things will be in total control and people can actually think of investing in J&K. There is a need to come up with affordable housing and we would definitely like to contribute towards achieving it," said Pradeep Aggarwal, co-founder and chairman, Signature Global, a real estate firm based in Delhi, and chairman of ASSOCHAM National Council on Real Estate, Housing and Urban Development, an industry body.
Shubhranshu Pani, managing director-retail services at JLL India,a commercial real estate services firm, said there are enough people in the state who’ve been very cautious about investing in real estate because the militancy and the political scenario were not very favourable. “Before the outsiders, I think it will be the residents of the state who will not be afraid of investing now," he said.
However, for now, he thinks, real estate in Jammu will get a new lease of life, but is unsure about the Kashmir region.
Should you invest?
There are a lot of factors that you need to take into account before making an investment in J&K because there is uncertainty as of now. You should ask yourself fundamental questions such as how would you guard yourself against encroachment or manage the property remotely, said Lovaii Navlakhi, managing director and chief executive officer, International Money Matters Pvt. Ltd. “Many other changes are likely which could affect prices negatively. So investing now with a few early assumptions may not hold true in the long run," he added.
Other experts too think you should wait-and-watch for the next few months. “Wait and see how the political scenario unfolds in the Valley in the coming months. If the region becomes safer for residents, there could potentially be some momentum on its real estate market, especially from the hospitality sector as this region has a lot of untapped potential in the hospitality segment. But again, perceived safety is of paramount importance for any real estate activity to pick up in any region," said Puri.
Shweta Jain, certified financial planner, chief executive officer and founder, Investography Pvt. Ltd, too, advises potential investors to hang in for a while. “Though it is a positive start, a lot of things need to be done in J&K in terms of safety and law and order before I can suggest people to put in their money," said Jain.
There is potential for real estate to see growth in J&K. “Logically, if there are fewer people (J&K residents) who can sell their real estate which is owned by them, and more people (rest of India) can buy, prices should be heading northwards," said Navlakhi. However, it would be unwise to rush into a deal. Mint doesn’t recommend real estate as an investment due to illiquidity, low returns and the problems that remote management, especially in a region like J&K, can entail. For those who are keen on owning property in the region should wait for the clouds to clear.