All you need to know about buying property in Jammu & Kashmir
Following J&K's reorganisation, people from other states are now eligible to buy property there.
But is the market really open?
Article 35A, which has now been abrogated, allowed the Jammu and Kashmir legislature to define permanent residents of the state and only those who were eligible could purchase land or property.
Now, following the reorganisation of the state into two union territories - Jammu & Kashmir and Ladakh - people from other states are eligible and keen to buy immovable property.
If you’re planning to buy a property in Jammu & Kashmir, here’s what you should know:
Following the abrogation of Article 370 and Article 35A, Jammu & Kashmir shall now be treated like any other state/UT in India. All standard rules and regulations of the Central government will apply there too. However, a state RERA policy must be formed to make the procedure and rules explicitly clear.
Anuj Puri, Chairman - ANAROCK Property Consultants, says, "The region will have to formulate its own RERA policies, which may not be similar to other hill states that have their own respective laws. Without the benefit of regulation, the entire question about property purchase remains wide open as the government has decreed that property transactions need to fall under RERA ambit."
"As such, it is still early days and investors must await the announcement of a regulatory body governing real estate in the region. If one decides to go ahead with a purchase before this happens, it is highly advisable to involve a legal expert in the transaction," Puri adds.
What trends suggest
While tier 2 and tier 3 towns are increasingly becoming attractive realty destinations, the trends vary with the specific economic drivers. While J&K may have huge potential as a real estate destination, economic activities are yet to shape up properly.
"The smaller cities which have qualified under the Smart Cities programme are seeing very good traction and have in fact taken a lead over tier 1 cities in this programme. This is for many reasons — they have more to gain, face fewer challenges in terms of resistance to change, have less densified urbanization patterns to work with, and enjoy the advantages of easier land acquisition and — in some cases — stronger local political will," Puri explains.
Is it the right time to take the plunge?
Certainly not, since there is a lot of ambiguity around the rules and there are no clearly defined RERA policies also. Experts suggest that investors should not take hasty decisions as the region's viability as a real estate investment destination is still under doubt and lacunae still exist.
Gulam Zia, Executive Director - Valuation & Advisory, Retail & Hospitality at Knight Frank, says "The region of Jammu and Kashmir can provide great potential for development in the future. However, given the fact that the market is nascent, the valuations are still not known. Any new market such as this one poses the fundamental problem of benchmarking, which makes it difficult for investors to make sense of the correct valuation of properties."
Corroborating this view, ANAROCK's Puri says, "It is still too early to gauge the real impact of this move on Kashmir’s real estate market — or indeed its viability as a property investment destination. As of now, it is still a highly sensitive region and security concerns will keep residential property buyers at bay since safety and security are an integral aspect of any homebuying decision. Once the situation stabilizes, it will still need the benefits of RERA-level regulation."
Puri, however, believes that the move to revoke Article 370 and Article 35A will have a positive impact on the overall real estate market in the region. "Locals should finally see an increase in the value of their properties, based on the prospects of this market opening up for Indians from outside J&K to finally invest in immovable property in the region. In fact, in his recent address to the nation, the Prime Minister categorically invited various industries — including Bollywood — to make investments across the entire region," he says.
The way forward
"It would be advisable for investors to look at alternate ways of entering the market such as joint development and joint ventures with local partners. Under such an understanding, the land component would be retained by local partners, while national-level players would bring in the technical know-how in the fields of development management, financial strength and marketing strategies, amongst other things,” says Zia.
Fake news and advertisements by miscreants on social media, offering villas and bungalows, have been doing rounds off lately. While there is huge consumer interest to own a property in the newly formed UTs, investors must not fall for such unsolicited advice or offers.