The depressed property prices in Jammu and Kashmir will shoot up by up to 50 per cent because of the opening up of the realty market after the government's decision to revoke Article 370.
In Srinagar's prime Pantha Chowk area, houses can be bought for as low as Rs 2,300 per sq ft. Besides local markets, the place has a stadium and a Kendriya Vidyalaya, but property prices are among the lowest in India, even lower than in the outskirts of most tier 2 cities.
In Pacci Dhaki area of Jammu too, near Mubarak Mandi Palace, prices are equally low at Rs 40 lakh for a 6 marla (1,634 sq ft) independent house. Proximity to historical places and market areas has not helped improve property prices in Jammu and Kashmir where people from outside the state cannot buy land or property. A house at such a location in a non-metro capital city would easily cost upwards of Rs 60 lakh, while in a metro like Delhi or Mumbai it could cost in tens of crores.
But with Home Minister Amit Shah moving to revoke Article 370 and Article 35(A) of the Constitution that granted special rights to Jammu & Kashmir, things may change. The revocation of Article 35A, which debarred non-residents from buying property in the state, may open the doors for outsiders to invest in immovable property within the union territory.
"Real estate transactions so far have been highly restricted in Jammu and Kashmir. As a result, market appreciation of property has been curtailed. Once it is opened to all, there will be a demand for purchasing properties and that may drive up prices," Pankaj Kapoor, founder and MD at real estate consultancy Liases Foras told Business Today.
The prevailing property rates in Jammu and Kashmir are among the lowest in India, where the most expensive Mumbai housing market commands as high as Rs 25,000 per sq ft in some locations. Even outskirts of smaller cities like Meerut command upwards of Rs 3,000 per sq ft, with prices rising rapidly in case of proximity to a market place or economic centre.
However, this is not the case in Jammu and Kashmir, where property prices seem to be stagnant. In most localities, prices have been unchanged or gone down in the last decade or so.
Kapoor says the revoking of Article 370 may also attract many high networth individuals to the real estate market in Kashmir.
"J&K has its own attraction quotient and will drive people who are looking at second homes. We have already seen heavy demand for second homes in scenic places like Lonavala, Khandala and many others. Investors will rush to invest in the state," Kapoor said.
The biggest deterrent for outsiders considering investment in the state's real estate, however, could be the uncertainty around economic growth and development, besides the question of terrorism and safety. Moreover, the state remains seeped in its own culture and outsiders moving in there may have to face hostility from locals, who could view it as an onslaught on their cultural ethos.
Dr Niranjan Hiranandani - Sr VP- Assocham & National President- NAREDCO said, "The government's move will provide an impetus to the economic growth of the largest democracy and fetch better employment opportunities contributing to the nation's projected GDP growth.
"The significant move, in theory, opens up potential opportunities for development-led economic growth in the Union Territories of J&K and Ladakh," he added.