Monthly Archive:

March2017

‘Luxury apartments boom not a bubble’!

March 27, 2017

Shangri La Group Vice Chairman Madhu Rao speaks at the recent Finance Asia organised Sri Lanka Investment Summit in Hong Kong. Others from left are Jones Lang LaSalle Sri Lanka Head of Transactions Sunil Subramanian, Indocean Developers Director Pradeep Moraes and CHEC Port City Colombo Chief Sales and Marketing Officer Liang Thow Ming

 

  • Altair says bulk of purchases equity based and mostly by Sri Lankans so far

  • Sri Lanka shows second-highest growth in Ultra Rich Community (above $ 30 m) as per global real estate consulting firm Knight Franks

  • Luxury apartments have offered capital gains of 12%-15% year-on-year while rental yields have been 6%-8% per annum but critics caution over too many units, pricing, affordability and yields

  • Annual Lankan market is 600 sold units

  • Positive ranking such as Colombo as fastest-growing city and most livable city in South Asia boosting demand

  • Port City targeting its planned 21,000 units for affluent South Asians

  • Says high net worth individuals in India, Pakistan and Bangladesh to double to 600,000 in 10 years

  • 2017 Budget moves such as foreigners allowed to buy from first residential floor and 5-year residency visa for apartment purchases above $ 300,000 to enhance industry prospects

The apparent boom in the luxury apartments market is not a bubble the industry claims, with future buildings pointing to great potential and investments despite some concerns.

The success so far and the optimistic future outlook of the Sri Lankan real estate market was shared among prospective investors in Hong Kong and Australia by leading promoters Indocean Developers (Altair) and the upcoming CHEC Port City Colombo as well as Shangri-La Hotels and Resorts’ The Residences at One Galle Face.

“There is no gearing or bubble to burst,” an emphatic Indocean Developers Director Pradeep Moraes told the Finance Asia-organised Sri Lanka Investor Summit in Hong Kong, followed by the Colombo Stock Exchange-organised Invest Sri Lanka conferences in Sydney and Melbourne.

“Ninety percent of luxury condominium purchases in Sri Lanka are equity-based,” Moraes added. According to him, at present 60% of the sales thus far are for domiciled Sri Lankans and a further 30% to Sri Lankan expatriates. He said factors driving domestic growth include changes in lifestyle, accessibility/convenience, relative affordability, traffic – reversed urban migration, security and difficulty in finding domestic help.  Furthermore, Sri Lanka has the second-highest growth in the Ultra Rich Community (above $ 30 million) as per global real estate consulting firm Knight Franks.

Another significant feature is the fact that the bulk of the investments for luxury apartment development has been from overseas. “The fact that buying has been largely from Sri Lankans and development has been from foreign parties, gives greater stability to the luxury condominium market. This is diametrically opposite to what has happened elsewhere such as Dubai,” Moraes added.

Indocean is investing over $ 250 million in 404-apartment complex Altair, in Colombo 2, comprising two tower blocks, one of 63 storeys, which leans onto a taller, 68-storey tower.

Shangri-La is investing $ 450 million on two residential towers of 51 floors containing 390 residential units and the company said half of the units have already been sold.

China’s CHEC is investing $ 1.4 billion to reclaim 269 hectares for the Port City project which will bring in a further $ 13 billion in investments for various projects including 21,000 apartments.

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From left: Indocean Developers Director Pradeep Moraes, CHEC Port City Colombo Chief Sales and Marketing Officer Liang Thow Ming and Shangri La Hotel Sri Lanka Head of Sales and Marketing (Residential) Neluka de Alwis speak at the Colombo Stock Exchange organised Invest Sri Lanka conferences in Sydney and Melbourne last week.

Given that 90% of the sales are driven by Sri Lankans, Moraes told the investment promotion events in Hong Kong and Australia “this shows only 10% has been bought by foreigners hence the great future upside in the market.”

CHEC Port City’s Chief Sales and Marketing Officer Liang Thow Ming, also speaking at Hong Kong and Australian investment promotion events, said that currently 600 luxury apartments were sold annually as per industry specialist Jones Lang LaSalle.

“When completed the Port City Colombo will add 21,000 units. We are largely looking at the India, Pakistan and Bangladesh markets which have a combined population of 1.7 billion. According to KPMG research, these countries have 300,000 High Net Worth Individuals (HNWIs) and this number is expected to double in 10 years,” Liang said. “This is why we are saying we are building a world-class city for South Asia,” he added.

Altair’s Moraes also said luxury condominia projects completed thus far such as Emperor, Empire, Monarch, 7th Sense, 110 Parliament and Fairmount have been sold out 100% while those under construction including Shangri-La, CCC, Cinnamon Life and Clear Point have had a near 50% absorption rate.

Speaking of Altair’s own sales status, he said in terms of units 66% have been sold and in terms of area it was 73%.

He also said construction was progressing well with the sloping tower nearing its 55th floor and the vertical tower close to its 60th floor.

The industry veteran told prospective investors and buyers in Hong Kong and Australia that Sri Lanka was the fastest-growing city as per the MasterCard Global Destination Cities Index and the Most Livable City in South Asia.

Furthermore, 2017 Budget moves such as foreigners being entitled to purchase condominia on a freehold basis from the first floor onwards as opposed to the current rule of above the 4th residential floor, and a five-year resident visa for purchases of apartments over $ 300,000 were also highlighted along with hassle-free repatriation of capital and profits.

The industry’s optimism exists despite some expressing concern over a bubble on the belief that most purchases are funded by bank credit. Another concern is over the market being flooded by too many apartments, pricing and affordability as well as falling rental yields.

Chamber of Construction Industries CEO/Secretary General Nissanka Wijeratne was recently quoted as saying: “In real estate, I think we need to be a bit careful because there are currently 49 towers being built. I don’t know whether we have reached the bubble. For the ongoing ones, there’s demand. Most are sold out but we have to see whether there’s demand beyond that.”

Additionally, Candor Group Director Ravi Abeysuriya was also quoted as saying rental yields of luxury apartments, which have been experiencing downward pressure recently, will face further complications given the introduction of value added tax from April.

Perhaps alive to possible concerns even from foreign investors/buyers, Altair’s Moraes told the Hong Kong and Australian investor conferences that the industry has offered capital gains of 12%-15% year-on-year whilst rental yields have been 6%-8% per annum, suggesting at a peak level the returns had been over 20%.

For the full article visit FT.lk

Sri Lanka makes strong case to woo Hong Kong investor interest

March 24, 2017

 

 

  • Nearly 250 attend full-day Sri Lanka Investment Summit showcasing country’s progress and potential for new growth in key and emerging economic sectors
  • Finance Minister Ravi Karunanayake highlights unity Govt.’s success so far in improving macroeconomic fundamentals and ongoing and future measures to achieve high quality inclusive growth
  • Invites Hong Kong-based investors to harness win-win growth opportunities in South Asia’s hub Sri Lanka

 

 

Sri Lanka yesterday made its strongest effort to woo interest from Hong Kong-based companies, fund managers and investors, highlighting recent macroeconomic progress as well as measures to boost higher inclusive growth from which foreign firms could benefit.

The concerted effort by the private and public sector was made at the full-day Sri Lanka Investment Summit in Hong Kong, organised by the influential Finance Asia magazine in partnership with multiple stakeholders including Standard Chartered Bank and Asia Securities.

Nearly 250 representatives from Hong Kong-based companies, fund managers and investors attended the summit held at the iconic Ritz-Carlton Hotel, the world’s tallest. Hong Kong, which itself is a hub and economic success, boasts of an economy worth over $ 300 billion, over four times that of Sri Lanka, with a per capita income of

$ 36,000. Chief Guest Finance Minister Ravi Karunanayake and Sri Lanka’s Ambassador in China Dr. Karunasena Kodituwakku as well as a host of private sector business leaders, public sector officials and existing foreign investors spoke at the event.

They made a compelling case as to why Sri Lanka must be considered a new destination for investments from Hong Kong-based companies.

Karunanayake, who headed straight to the summit from the airport after arriving in Hong Kong only last morning, in his speech highlighted some of the salient democratic and macroeconomic achievements of the unity Government led by President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe. He pointed out that despite differences of opinion as expected in a coalition, the two parties were working together for the collective good with consensus-oriented politics and policies.

As proof of success so far, the Minister read out a host of positives from Fitch’s recent action by which it revised Sri Lanka’s rating outlook from negative to stable as well as the IMF’s statement following the recent review mission.

“We are proud of the progress made and we will ensure to be a partnering nation of the success stories unfolding in the Asian region,” Minister Karunanayake added.

The unity Government’s success in improving fiscal and financial discipline leading to a lower budget deficit was emphasised as well as the aggressive efforts to reduce the massive debt burden brought upon by the previous regime. Reforms as well as the restructuring of some of the loss-making national projects such as the Hambantota Port and Airport as well as state-owned enterprises were also touched upon by the Minister.

“We are aggressively promoting Public Private Partnerships and a greater private sector role in generating future growth,” Karunanayake told the Hong Kong summit.

“We are on course to achieving economic prosperity through accelerating growth with social inclusion. Our aim is to achieve a high quality growth which is central for sustainable development,” said the Finance Minister, assuring that the Government would not hesitate to initiate appropriate policies and measures as and when required to usher in the required development.

“We have done what we have said so you can believe the country and the Government and more importantly its policies,” Karunanayake said, adding that the time was opportune for foreign investors to secure diverse opportunities in Sri Lanka.

The Government’s efforts to enter into FTAs with China, Singapore, Japan and Korea, apart from expanding an existing deal with India, were emphasised to drive home the point among Hong Kong investors that geographically, the strategically-located Sri Lanka would be a very attractive hub to tap into opportunities in South Asia and Southeast Asia.

The impending return of the GSP Plus benefit to better serve European markets was also highlighted. The planned Colombo International Financial Centre and Dedicated Economic Zones in Hambantota were among other initiatives shared with participants of the Hong Kong summit.

Minister Karunanayake said potential new investors would have a “crucial role to play” in the overall effort to create a prosperous Sri Lanka and assured the Hong Kong summit’s participants that Sri Lanka’s future offered a “win-win” situation for investors and the Government.

“We will continue to support the private sector in whatever possible way so that private sector economic activities will foster,” the Finance Minister added.

He also revealed that the Government was envisaging Foreign Direct Investments of around $ 4 billion this year.

Sri Lanka’s Ambassador in China, Dr. Kodituwakku, called for greater investments, pointing out that FDI and an export-led growth strategy were key for Sri Lanka’s future. He also spoke about how Hong Kong FDIs gave a big initial boost to China to open up its economy.

“Just like many other Asian countries have transformed their economies with the back of FDIs, Sri Lanka too wishes to transform its economy with the support of the FDI into a strong economy in which all Sri Lankans are able to enjoy a high standard of living,” the Ambassador emphasised.

Excellent investment destination

IMF Resident Representative in Sri Lanka Eteri Kvintradze, who figured in a panel discussion, said Sri Lanka was a compelling story and was at a critical juncture hence more private sector-led growth was needed.

She also listed several key achievements of the Government aided by the structural reforms under the IMF’s ongoing $ 1.5 billion support program as well as future challenges to further improve Sri Lanka’s growth prospects.

The Board of Investment’s Director General Duminda Ariyasinghe also made a very strong case why Sri Lanka must be seriously considered by Hong Kong investors.

Summit co-chairman Standard Chartered Bank Sri Lanka CEO Jim McCabe described Sri Lanka as one of the fastest-growing economies and an excellent destination for investments. The other co-chairman Asia Securities Chairman Dumith Fernando also pitched for more Hong Kong investments.

The summit involved a large number of Sri Lankan business leaders and professionals as well as longstanding and new foreign investors in Sri Lanka such as Singer Asia, apparel giant Courtaulds, World Bank private sector investor arm IFC, the Shangri La Group, Indoocean Developers Ltd/Altair, China Merchant (CMPort)/Colombo International Container Terminals, China Harbour/CHEC Port City Colombo Ltd., BPO operator WNS Global Services, Creation Investments  and ADM Capital, as speakers or panellists as well as participants to reinforce the message that the time is right for global investors to consider Sri Lanka.

Some of the companies represented include Hemas Holdings, MAC Holdings, Commercial Bank, Sri Lanka Insurance Corporation, Commercial Credit and Finance and Lynear Wealth.

Standard Chartered Bank was the international lead sponsor of the summit. Asia Securities adds its special brand of insight to the summit as lead sponsors and CHEC Port City Colombo, Altair and MAC are all onboard as distinguished corporate sponsors.  The Daily FT is the official media partner. Supporting organisations include the Ceylon Chamber of Commerce, the American Chamber of Commerce and the Oxford Business Group. Cathay Pacific was the official airline. This is the second summit by Finance Asia, an influential industry magazine, with the previous one held in Singapore last year.

Development Progress – March 2017

March 22, 2017

The latest images of Altair, soon to grace Colombo’s skyline with luxurious living. Scheduled to open in 2018.

 

CSE forum tells Sydney time to invest is now

March 22, 2017

National Policies and Economic Affairs State Minister Niroshan Perera (right) answers a question during the Invest Sri Lanka forum held at Sydney’s Shangri-La Hotel yesterday. Others from left: CSE CEO Rajeeva Bandaranaike, Fitch Ratings Lanka MD and CEO Maninda Wickramasinghe, Central Bank Director of Economic Research Dr. (Mrs.) Yuthika Indraratne, CSE Chairman Vajira Kulatilaka and SEC Director General Vajira Wijegunerwardane

 

• Participants urged to recognise ‘promise and potential’ of new SL

• Capital market policies to improve transparency

• Over 150 Australian citizens and companies, other firms as well as diaspora attend forum

• Sri Lankans in Aussie told their investment crucial for driving country forward

Australia’s most populous city Sydney was told yesterday that it was time to invest in Sri Lanka given the future upside supported by progressive policies in place or planned under a unity Government.

This message was conveyed at the ‘Invest Sri Lanka’ forum organised by the Colombo Stock Exchange (CSE) in partnership with several stakeholders at the Shangri-La Hotel in Sydney. Over 150 Australian citizens, companies, other firms and representatives based in Sydney as well as Sri Lankans living in Australia attended the forum.

It was the first in a series of investor promotion conferences to be carried out this week in Australia and New Zealand, a key initiative undertaken for the first time in 12 years.

Chief Guest National Policies and Economic Affairs State Minister Niroshan Perera told the Sydney forum that Sri Lanka was set to enter new territory as it was poised for a renewed drive of growth and progress.

He said the country under the unity Government had progressed in recent times as a result of the commitment to economic and social reform. “The present Government envisions a globally competitive, export-led economy driven by revolutionary thinking and bold policies. We expect to drive the nation towards achieving middle income status, while maintaining a strong focus on sustainable economic growth and good governance,” he said.

“The Government has implemented a number of business friendly policies with a view to strengthening our local economic and business environment,” State Minister Perera added.

Noting that ineffective regulation for the longest time had stifled the economic and business climate as well as employment growth, he said the new Government was well in the process of replacing such regulations.

The forum was told that a new set of investment incentives based on Capital Allowances and a low tax regime were introduced through the 2017 Budget aimed at broadening the scope of Lankan businesses and having a significant impact on investment sourced through domestic and international channels. He also said the targeted outcome was to bring Sri Lanka within the top 70 nations of the Ease of Doing Business Index by 2020.

The importance of Sri Lanka as an Indian Ocean hub in the realm of global logistics and commercial activities was also stressed. The State Minister said an increasing number of businesses and investors are once again looking to Sri Lanka as an investment destination. He also referred to projects such as the Western Megapolis Development and the Colombo International Finance Centre to step up foreign investments, harness Sri Lanka’s strategic geographic location and achieve higher economic growth.

Focusing on capital markets, State Minister Perera said the Government was keen on maintaining integrity and quality by setting a policy framework that will lead to the operation of an open, secure and transparent marketplace.

“Through the 2017 Budget, the Government introduced a number of initiatives that, we believe, are likely to develop the capital markets in the coming years,” he said.

The Sydney forum was also told about Government’s announced plans to introduce a number of non-core businesses to the capital markets and these listings are likely to have a positive effect in terms of sparking market interest among investors and boosting market liquidity.

“A key priority of the present Government headed by President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe is to regain the confidence of the international community. We are pleased to see a number of positive developments in this regard,” Perera pointed out, highlighting the impending return of GSP Plus benefits from the European Union and rising tourist arrivals.

The State Minister also sent a strong message to the Sri Lankan Diaspora in Sydney in particular and Australia in general.

“Many Sri Lankans who left our motherland during the conflict are actively looking to improve their association with Sri Lanka. The present construction boom driven by Sri Lankans living abroad is an example of such interest and involvement,” he said.

“Such progress is exactly why forums of this nature are of importance, because they play an important role in assisting the Government to reach out to our large and diverse Sri Lankan community overseas. Your ideas and your support are important to our country as we drive the future of our country forward,” the State Minister told the Sydney forum.

He urged participants to recognise the enormous promise and potential of an “emerging new Sri Lanka” built on the foundation of the Government’s new agenda of administrative and economic reforms and ease of doing business.

In that context Perera promised the Government’s continued commitment to facilitating investments and stimulating the establishment of transparent and well-governed institutions.

The Sydney forum and Thursday’s event in Melbourne are timed in the backdrop of Sri Lanka and Australia celebrating 70 years of diplomatic ties.

Sri Lanka’s High Commissioner in Canberra, Australia S. Skandakumar said Australia and Sri Lanka have long shared strong historical ties, common values and interests with trust which has resulted in multiple forms of economic and social cooperation over the years.

Skandakumar said economic and social progress in Sri Lanka seen in recent times has been complemented by a renewed confidence in the country among the international community, especially in Australia.  The High Commissioner invited members of the audience to visit Sri Lanka to experience first-hand, the benefits of playing a part in a resilient growth story.

CSE Chairman Vajira Kulatilaka and SEC Director General Vajira Wijegunerwardane in their presentations were also emphatic that the time was opportune to invest in Sri Lanka.

Central Bank Director of Economic Research Dr. (Mrs.) Yuthika Indraratne offered insight into the economic policy direction of the country while Fitch Ratings Lanka MD and CEO Maninda Wickramasinghe presented a macroeconomic overview.

The Sydney forum also featured several leading real estate developments in Sri Lanka contributing in the capacity of event sponsors, including the Colombo Port City (Platinum Sponsor) One Galle Face by Shangri-La Hotels & Resorts (Platinum Sponsor) and the luxury apartment development by Altair (Corporate Sponsor).

The main presentations will be followed by a panel discussion moderated by CSE CEO Rajeeva Bandaranaike and a question and answer session with the audience.

The initiative is being held in association with several organisations including the Securities and Exchange Commission (SEC), the Sri Lanka High Commission in Canberra, Australia, Consul General in Sydney Lal Wickremetunga and Melbourne Prasanna Gamage, the Sri Lanka and Australia Chamber of Commerce and the Sri Lankan New Zealand Business Council.

The last CSE-led investor promotion was held in Australia in 2005. Post-war, the CSE has conducted road shows in New York, London, Singapore, Dubai and Mumbai.

On Wednesday two events will be held in Melbourne at the International Chamber House Melbourne and at the Novotel Melbourne Glen Waverley while another will be staged at the Fickling Convention Centre in Auckland, New Zealand on Saturday.

For the full article visit FT.lk

 

Surbana Jurong Group Visit to Altair

March 9, 2017

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Altair felicitates Moshe Safdie

March 8, 2017

The management of Altair recently hosted an event at the Hilton to felicitate Moshe Safdie, the Altair project’s architect and architect of Marina Bay Sands in Singapore and many other iconic buildings.

 

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Taken from FT.lk