Monthly Archive:
March2019
– Association says ongoing projects should be exempt from VAT
– Welcomes 30% reduction of Cess but benefit marginal for projects nearing completion
The Condominium Developers Association of Sri Lanka (CDASL) is lobbying for ongoing projects to be granted an exemption from the newly introduced output Value Added Tax (VAT) on apartment sales.
Speaking to The Sunday Morning Business, CDASL Chairman Pradeep Moraes stated that many of the ongoing big projects in the country have neared the completion of construction work and imposing VAT on these apartments is unreasonable.
“Projects for which permits have been obtained already and work is ongoing should be exempt from output VAT as all their contracts and pricing has been based on previously existing tariffs. Each development will be affected in different degrees depending on how much they have spent on the project and how much inventory is left.”
Under the Budget 2019, 15% VAT has been imposed on apartment sales with effect from 1 April 2019.
“All the agreements that have been signed will continue to be exempt from output VAT. We have contracted with the clients also on the basis of certain conditions.”
Speaking further, he stated that providing a 30% cess reduction on imported construction material is most welcome but this would be of marginal benefit for developers who are nearing completion.
“Altair has spent more than 85% of the total project cost and there is 30% inventory to be sold. Therefore there is a disproportionate percentage of VAT that cannot be claimed and many other developers are in the same predicament,” said Moraes, who is also Director of Altair.
Meanwhile, speaking to The Sunday Morning Business, Sector Head of the Property Group at John Keells Holdings Nayana Mawilmada stated that even Cinnamon Life has completed most of its structural work and would therefore not benefit significantly from the cess reduction. 93% of construction work at Cinnamon Life has been completed while as at early March, 64% of its apartments were sold.
In another measure to offset the negative impact of the VAT impositions, the Budget 2019 also proposed the granting of residential visas for three years to foreign nationals who invest Rs. 70 million or more in condominiums. This process will be implemented this year. However, this residential visa will not be valid when the foreigner exits from this investment.
As appeared on The Sunday Morning
The growth of tourism and Sri Lanka’s probable emergence as the main commercial and financial centre between Singapore and Dubai with the rise of the Colombo Port City, augur well for the country’s condominium market, a business leader in the sector said recently.
Altair Director Pradeep Moraes told a Real Estate Investor Forum in the Maldives that in locations such as Phuket, where tourism is not solely resort-driven, it is an accepted fact that increased tourism is strongly linked to real estate development and the same applies to Sri Lanka.
Investment in real estate is also far less fickle and volatile than investments in other instruments such as stocks and bonds, and this was amply demonstrated when Sri Lanka experienced political instability a few months ago which led to a substantial flight of foreign capital invested in stocks and bonds but no known or seen impact on real estate holdings, Mr Moraes said, disclosing that this fact has been articulated to policymakers as a justification for greater support to the industry.
The Real Estate Investor Forum was hosted by Research Intelligence Unit (RIU) and had as its Chief Guest the Minister of Infrastructure of the Maldives, Hon. Mohamed Aslam. This was the second forum in the Maldives within the past three months at which Altair was a participant, following its presence at Maldives Living Expo 2019, which it supported both as an exhibitor and a co-sponsor.
Mr Moraes reiterated that Sri Lanka’s real estate sector has a demonstrated potential of generating over US $ 750 million per annum in foreign direct investment, and that condominium growth in particular is fuelled merely by aspirational lifestyle or upward mobility but by the very basic fundamental of need.
“Land banks are fast diminishing and high-rise condominiums can deliver 20 times more efficiency than conventional housing,” he said, pointing out that economies of scale render apartments more affordable than smaller-sized conventional dwellings, and the plethora of approvals required for construction can often lead to protracted delays in building individual houses.
Another factor in support of condominiums is that Colombo does not have the luxury of an urban spread as the already overloaded road network doesn’t allow for extended commutes, and even the proposed Light Rail would probably only play catch up, Mr Moraes said.
Sri Lanka’s most distinctive and instantly recognised high-rise, and already 70 per cent sold, Altair is a one-of-its-kind development in South Asia in terms of architectural design, structural engineering, and living experience. The building designed by celebrity architect Moshe Safdie comprises of two tower blocks, a 63-storey sloping tower which leans in to a taller, 68-storey vertical tower. Acknowledged as a new paradigm in contemporary living in Sri Lanka, the Altair building has already brought a new dimension in aesthetics to Colombo’s skyline and offers its 400 apartments spectacular views of the Beira Lake, the Indian Ocean and the city of Colombo.
Photo caption – (Left) Altair Director Pradeep Moraes addressing the RIU Real Estate Investor Forum in the Maldives, and the Altair team at the event.
Mr Pradeep Moraes in his capacity as the Chairman of the condominium developers association of Sri Lanka has issued a statement refuting the damaging Sunday Times article under Right of Reply. The letter in full is produced below.
21st February 2019
Mr. Feizal Samath
Editor- Sunday BusinessTimes
Wijeya Newspapers
#8, Hunupitiya Road
Colombo -02
Dear Sir
We are compelled to request for the traditional right of reply to an article published in your newspaper last week which is malignant, misinformed and overwhelmingly incorrect and kindly request you to afford our reply equal prominence and positioning. We would also kindly request you to publish this rebuttal in its’ entirety.
This article quotes or misquotes (as the case may be) a gentlemen named as Mr. Ravi Abeysuriya said to be the Group Director of a Group called Candor.
We were shocked, angered and dismayed on reading through this article which was titled “Uncertainty in Sri Lankan Property Market” at the gross untruths, irrelevancies, insinuations and innuendoes which comprised almost the entire body of quotes attributed to him and rendered the article false, misleading and malicious in almost its entirety.
The tone of the article seems to seek to cause damage and wreak destruction on the Real Estate Industry.
The motives behind this unsubstantiated and untrue tirade we are unable to understand nor is it our business to try.
It may be an individual’s or company’s misguided belief, real or imagined grouse or vendetta. It could also be the belief that damaging one industry is the best means of propping up another or a case of complete ignorance combined with the presumption of knowledge.
It could also that Mr. Abeysuriya has been roundly misquoted in which case he joins all Real Estate stakeholders as being common victims of this article, and shares our empathy in the damage to reputation.
Let us do an elementary Fact Check.
Also the statement implies that other trades / industries are free from any payback difficulties.
Conversely if the 100% referred to is over a shorter period and the rate is “gradually decreasing” then the sector is still doing wonderfully well and where is the problem?
This type of colossal inexactitude would be hilarious if not relating to such a serious subject.
Anyone disbelieving our outright rejection of this colossal untruth can cite right to information and check the statistics at the Land Registry.
We respectfully submit to the Government and it advisors that a re-imposition of output VAT on apartment sales will not serve its intended purpose i.e increased tax revenue. It will shrink the sector to a size that yields far far less taxes than if allowed to grow to its natural, organic potential.
The industry has suffered over the last one and a half years or thereabouts as a result of ill-advised and perhaps irresponsible, and certainly baseless conjecture, surmise and speculation about its viability expressed by certain Govt., Public Service and Bank officials – again either quoted or misquoted within or without context.
This unfortunately fueled the typical Sri Lankan negativity and rumour mongering that sadly affected the momentum of the Real Estate Industry which was vibrant at the time.
The litmus test that the industry has passed though, the gauntlet that it has successfully run, is that despite the recriminations, and despite the prophets of doom, real estate in Sri Lanka has not succumbed to fear mongering.
The fundamentals of Sri Lanka condominia are extremely robust, and it has the demonstrated and proven capacity to (in very modest terms) generate at least $ 750 M / year in FDIs if even mildly supported to so do.
Overall we believe that it is way overdue for us to get together, within industries, and across industries, and promote Sri Lanka as a holistically appealing and viable commercial entity, because our equitable share of an expanded cake will be far bigger and far more wholesome than a slice we fight for at the cost of another.
Regards,
Pradeep Moraes
Chairman
Condominium Developers Association of Sri Lanka
From left: Indocean Developers Director Ltd. Pradeep Moraes, PropertyGuru Asia Property Awards Director Jules Kay, Paramount Realty Director/CEO Dr Nirmal De Silva, and BDO Sri Lanka BDO Partner Sasanka Rathnaweera seen during the PropertyGuru Asia Property Awards media briefing at Shangri-La Colombo yesterday – Pix by Chamila Karunarathn
PropertyGuru, Asia’s leading property technology company and the host of the region’s largest real estate awards, officially opened the nominations and entries period for its prestigious competition in Colombo recently.
The third edition of Annual PropertyGuru Asia Property Awards (Sri Lanka) recognises the year’s most outstanding developers, projects and design which is scheduled to be held on 26 July at Shangri-La Hotel in Colombo.
“PropertyGuru aims to gain trust from consumers and aims to promote best in real estate for developers and consumers to create something for the future that will develop over time in to a community,” PropertyGuru Asia Property Awards Business Director Jules Kay told journalists in Colombo last week.
He said they intend to provide more than just residential opportunities and investments.
“Sri Lanka is very much at the frontier when it comes to these goals and that’s why we are proud to be a part of country’s real estate industry and to award and reward those who commit themselves to quality,” Kay pointed out.
Noting what made PropertyGuru standout as a regional property awards platform, he outlined fair, transparent and judged by independent experts as some of the salient features of the award scheme.
“Our judging process is intense and it happens over a period of time by our expert panel of judges,” he said.
He noted that this also provides the opportunity to showcase and share experiences of property development which is also a very important part of the PropertyGuru, Asia Property Awards.
“An important part of the Asia Property Awards are the categories, and these are developed by the judges to match actually what is happening in each market of the real estate sector. This year in Sri Lanka there is a wide spread of categories which reflects what is happening in the industry and how diverse it is,” he stressed.
According to the organisers’ online submissions are now being accepted on www.AsiaPropertyAwards.com The nominations are open to the industry and the public.
Open categories include Best Condo, Housing, and Residential Development in Colombo, North East, Central, and Southern Sri Lanka. There are also commercial categories for Best Retail, Office, Mixed Use, Industrial, Hotel Development, and Boutique Hotel Development.
A new category for Best Residential Development (Maldives) has been added due to strong interest from residential developers on the island.
A few special awards are lined up for entrants with exemplary track record in Corporate Social Responsibility (CSR), Sustainable Development, Design and Construction, Customer Care, and Building Communities initiatives.
In addition, a new Sri Lanka Real Estate Personality of the Year awardee will be named; it was presented for the first time in 2018 by the editors of PropertyGuru Property Report magazine to Pradeep Moraes, Director of Indocean Developers Ltd and Chairman of the Condominium Developers Association of Sri Lanka (CDASL).
The highest honours will go to the Best Developer and Best Boutique Developer.
The main category winners of the local competition will then be eligible to compete at the regional Asia Property Awards Grand Final to be held in Bangkok, Thailand in late November where finalists from more than 15 markets from Sri Lanka to Australia will vie for regional accolades.
He said Sri Lanka’s real estate industry has shown great potential for growth following the enthusiastic response of entrants to the first two editions of the competition. One of the country winners, the twin towers of Altair –– designed by legendary architect Moshe Safdie –– eventually took home the Best Condo Architectural Design (Asia) at the Grand Final in November 2018, besting 11 other finalists from across the Asia-Pacific region for its cutting-edge and pioneering concept.
With a solid reputation for fairness, transparency and credibility, the 2019 PropertyGuru Asia Property Awards (Sri Lanka) will be independently judged by a respected panel of experts led by Dr. Nirmal de Silva, Director and CEO of Paramount Realty. The judges will also conduct supervised site inspections for long listed nominees.
The 2019 PropertyGuruAsia Property Awards (Sri Lanka) is supported by official airline partner THAI Airways; official portal partner LankaPropertyWeb.com; official magazine PropertyGuru Property Report; and the award-winning team of BDO, the official supervisor.
The black-tie gala event, which was attended last year by nearly 400 guests, will be produced by the new awards business director Jules Kay, who is one of the original members of the Asia Property Awards team when it was established more than a decade ago.