Srinagar, Jan 3: Real estate market in Jammu & Kashmir, in general, and Srinagar, in particular, is facing a situation of too many sellers and lesser buyers these days.
Real estate dealers and property developers say they are unable to explain the sudden selling spree, especially of high value commercial properties, mainly in Kashmir region and Srinagar city. However, high-placed sources in the banking sector told Ziraat Times that the latest surge in sales seems to be fueled by bank borrowers trying to raise cash to settle their loan liabilities.
As previously reported by Ziraat Times, J&K Bank has announced a renewed one-time settlement (OTS) scheme for borrowers in Jammu and Kashmir. The scheme, which is aimed at reducing the bank’s non-performing assets (NPAs) and providing a way out for borrowers to settle their accounts, is available to borrowers with outstanding loans of up to Rs. 50 lakh.
Under the scheme, borrowers can settle their outstanding dues by paying a discounted amount. The discount will vary depending on the category of the loan and the date of settlement. For example, borrowers who settle their dues within one month of the scheme’s launch will receive a 5% discount on the outstanding amount. Borrowers who settle their dues within two months will receive a 3% discount.
According to multiple data analysed by Ziraat Times, including lists of the readily available commercial and residential plots in prime areas of Kashmir valley and Srinagar city, the selling spree paints a stark picture of the current situation.
“In the last three months, particularly this month, properties, including hotels, across various price points and locations are being offered for sale, suggesting some degree of financial distress among borrowers scrambling to meet some deadline”, said Furqan Sheikh, a real estate developer.
While, as of now, there are no indications that market prices are going down, according to real estate dealers, most sellers are ready to offer considerable discounts from the market rates to get sales done as soon as possible.
However, some sector observers believe that in the immediate future, a downward price pressure may be on the cards if buyers are hard to come by.
“The influx of properties competing for fewer buyers will inevitably lead to downward pressure on prices if the current trend continues”, says Naveen Singh, a property dealer based in Jammu.
Medium-term outlook
Some sector experts, however, believe that the current selling spree does not represent the real market sentiment of real estate in J&K, and that it is still seeing considerable value growth.
“Sooner or later, the market is expected to stabilize as the initial wave of distress sales subsides. Prices may find a new equilibrium but that is likely to see a major downward trend”, said Furqan Sheikh.
Despite the current situation, certain segments, particularly affordable housing and commercially viable properties in Srinagar and Jammu cities, are still seeing good growth in value compared to many other top cities in the country.
Focus shifting to properties with high return on investment
The influx of capital from OTS settlements, experts believe, could fuel another wave of investments in these areas, leading to further development and increased market activity.
While a distress situation is there, focus is shifting to more profitable commercial properties, as buyers are placing greater emphasis on better return on investments, Anil Dogra, another property dealer said.
This means that buyers are going for properties with better recurring investment returns rather than the properties with minimal return of investment, like residential plots.
Pertinently, J&K Bank’s renewed OTS scheme is available to borrowers whose accounts are classified as Doubtful-I, Doubtful-II, Doubtful-III, and Loss/RLAs, meaning the accounts which are unable to make repayments. The scheme is not applicable to accounts which are regularly making repayments.
