Bengaluru: Relatively high property valuations, non-transparency, lack of regulation and the willingness to sell land or properties will be the key challenges, if Kashmir is finally opened up as a real estate destination, for people from outside to invest in.
The revoking of Article 35 (A) by the Narendra Modi government on Monday, that debarred non-residents from buying properties in Jammu and Kashmir, has now opened up the possibility that outsiders may invest in immovable property in the union territory.
According to realty portal Makaan.com, the average sale price of the 24 properties in Srinagar listed on its site, mainly independent residences, is ₹2.5 crore, while the starting price is ₹1.60 crore. As per pricing trends in 2019, property prices in Srinagar, just like Jammu, have remained stagnant with no upward movement.
In the ‘Adarsh Palm Spring’ project in Srinagar’s Humhama locality, in central Kashmir, ready apartments are priced at around ₹65-85 lakh.
These prices in Srinagar are comparable to any larger property market like Bengaluru or Pune.
Pricing, however, is not the main concern, said property analysts.
“A property market which has so far operated in a closed environment like Kashmir, transparency and valuations would be an issue. Even if there was a buyer, would there be willing sellers who would agree to new, discounted valuations, because a valuation mismatch is bound to then happen. It will remain a turbulent market for some time, until there is digitisation and systems in place," said Gulam Zia, executive director of property advisory Knight Frank India.
While Srinagar is predominantly a seller’s market, and land and property title records may be a huge issue during transactions, the Jammu market is slowly diversifying into smaller apartments from larger, independent homes to address demand, said Ajay Jamwal, owner of Jammu-based Om Shakti Builders and Developers.
“There are newer projects coming up where homes are priced at ₹45-55 lakh but the bulk of the inventory is larger homes, above 1700 sq ft or so," Jamwal said.
The possibility of opening up new real estate markets in the country right now, may not also meet with ample enthusiasm given the overall tepid sentiment in the sector.
In a conflicted and sensitive territory like Kashmir, it will take time for interested investors or buyers to step and step up momentum for any real estate activity, said experts.
“Property prices and valuations tend to be irrational before an regulation comes in. In the pre-RERA era, that was the case in most of our cities. Real estate momentum will entirely depend on the comfort investors get from both political stability and economic growth in the region. We believe that outskirts and peripheral areas will open up first and see activity with new supply coming in," said Pankaj Kapoor, CEO of Liases Foras Real Estate Rating and Research Pvt. Ltd.