Kashmir’s commercial real estate is in brewing crisis, demands urgent attention

In recent months, Kashmir’s commercial real estate sector, especially the hotel and guest house segment, has witnessed an alarming trend: a glut of properties on sale with very few takers. Every day, new listings flood the market — hotels, resorts, guest houses — yet genuine buyers remain scarce. This growing mismatch between supply and demand signals deep distress in the sector and raises serious concerns about the economic undercurrents affecting Kashmir’s fragile post-pandemic recovery.

At the heart of this problem lies a combination of over-leveraging and unrealistic expectations. After the revival of tourism in the Valley, there was a surge in optimism. Many entrepreneurs borrowed heavily from banks to construct new hotels and commercial buildings, anticipating a sustained boom. However, the reality has turned out to be far more complex. Seasonal tourist inflows, high operational costs, policy uncertainties, and a lack of year-round business have eroded expected returns, leaving many unable to service their debts.

The consequences are now starkly visible. Banks are tightening recovery measures, placing enormous pressure on borrowers. Many asset owners are being forced into distress sales, sometimes at prices far below their construction costs. Yet, wary of market volatility and a softening economy, investors are holding back, waiting for prices to fall further or seeking opportunities elsewhere.

This situation calls for immediate and thoughtful intervention. Policymakers must recognize that a wave of loan defaults and foreclosures could not only devastate individual livelihoods but also destabilize the broader banking system in J&K.

At the same time, a word of caution is essential for potential investors. While distressed assets might seem like bargains, the larger market risks — unpredictable tourism patterns, political sensitivities, and oversupply — must be carefully weighed. A blind rush to snap up such properties without realistic business planning could create a secondary crisis.

Kashmir’s commercial real estate is at an inflection point. Left unchecked, the current trends could trigger a chain reaction of economic pain that will take years to mend. It is imperative for stakeholders — banks, government agencies, entrepreneurs, and investors — to act prudently, with an eye on long-term sustainability rather than short-term gains.

The red flags are up. It is time to act before it is too late.