This research quantitatively examines the long-run economic and social impacts of the Disturbed Areas Act (DAA) in Gujarat, India, a law originally enacted to prevent distress sales of property in communally sensitive areas but which has evolved into a tool that institutionalized segregation and spatial exclusion. Employing a mixed-methods approach, this study investigates the broader economic consequences of the DAA, focusing on how its restrictions affect property market liquidity, wealth accumulation, and economic productivity. Using a difference-in-differences approach combined with agent-based modeling and network analysis, the research examines the effects of the 2025 amendments on mixed-religion neighborhoods and designated zones. Findings are expected to indicate that the DAA contributes to reduced property market liquidity and suppressed prices by creating transaction delays and administrative friction. Over time, these restrictions lead to slower appreciation of minority-owned properties compared to majority-owned ones, exacerbating wealth disparities. Additionally, spatial exclusion driven by the Act fragments labor markets and diminishes agglomeration economies, resulting in measurable productivity losses in affected districts. This study highlights the DAA’s unintended economic costs and underscores the need for policy reforms that streamline transaction processes and promote inclusive urban development. By reframing segregation as an economic inefficiency, the research advocates for technocratic solutions to mitigate the Act’s negative impacts and foster equitable growth.