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Altair Colombo
From left: Altair Director Pradeep Moraes with Chief Guest Maldivian Minister of Housing Aminath Athifa and members of the Altair team that participated in the Maldives Living Expo 2019
Sixteen months after structural construction was completed, Sri Lanka’s showpiece high-rise Altair continues to be an attention-grabber in markets around the world with the latest being the Maldives, where the development was one of the biggest attractions at the country’s longest-running property show. The Maldives Living Expo 2019, which was supported by Altair both as an exhibitor and a co-sponsor, attracted more than 5,800 visitors interested in luxury living options in the archipelago and the region. In its seventh edition, the three-day exhibition focused on home and living lifestyle, offering visitors an opportunity to get more information about upcoming real estate properties, products, services and options available in the Maldives and neighbouring countries. The 30 exhibitors showcased properties ranging from the utmost luxury to affordable living and lifestyle options.
Sri Lanka’s most distinctive and instantly recognised high-rise, Altair is a one-of-its-kind development in South Asia in terms of architectural design, structural engineering, and living experience. The building 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.
Amid concerns of a real estate bubble forming in the high-end segment, Indocean Developers Director Pradeep Moraes spoke to Daily FT on industry prospects, possible policy assistance and rejected concerns of unsustainable growth. Given below are excerpts of the interview:
Q: What are your reasons for saying there is no property bubble?
A: A property bubble occurs when there is a profusion of credit, when credit is easily obtainable and when credit is cheap. None of these are true where Sri Lanka is concerned. Getting credit is very difficult because our banks are very prudent, and thankfully so, and all of us know that credit is not cheap at all. What happened in places like UK post-Northern Rock is not something that can happen here, neither is there the frenetic euphoria about the real estate market that happened in Dubai where people were literally queuing to purchase and in certain instances reselling while still in the queue. In Dubai, most of the buyers were foreign and developers were local, in Sri Lanka the reverse is reality. Those are the type of phenomena that lead to a bubble. Another example is the toxic credit that was very easily available in the US; none of those things are here. When you look at the data, less than 10% of the luxury apartment market in Colombo is financed through loans. It is over 90% equity financed. So there is no pressure of financial payments, there is no case of immediate resale, and it is not speculative purchasing. To give a small example, we have sold 270 apartments, from 404, to our knowledge, (and we would be involved in such a process), only two have changed hands so far. Moreover, about 60% of the buyers are domiciled Sri Lankans, about 30% are expatriate Sri Lankans, and only the rest for foreign buyers. This has a dual advantage because the buyers are far more rooted in Sri Lanka and not considering the property purely as an investment. As foreign buyers are less than 10%, the potential for expansion is massive. We have literally not even scratched the surface of the international interest that could be generated into Sri Lanka as a real estate destination. Also, Sri Lanka has a very low ratio of urbanisation – Wikipedia puts us at 15%, the UN at 18% and the Government estimate is 48%. Even if we are to use an average of 27% as an example, it is way below global figures which are over 50% with smaller countries showing higher ratios. So the only way forward in terms of residential development is up.
Q: You said that as much as 90% of the purchases are equity. How do you feel this impressive amount of money is generated? Is it a case where people are selling land outside of Colombo to finance the purchases?
A: I suppose these are top professionals and businessmen who have gathered savings over time and regularly earn well. When you move around Colombo, it is obvious that there are plenty of people with substantial amounts of money and they are free to invest where they wish. We feel that the segment least vulnerable to a bubble is the luxury one because those who buy apartments, for the most part, do not borrow. They have ample funds, so they can weather it out, even in the very unlikely event of a market downturn. They don’t have the banks sitting on their tails with higher interest rates, and having to finance those banking loans. Developers who go into luxury are huge, very well established companies. We have Fortune 500 companies investing in the luxury segment along with top local blue chip companies like John Keells Holdings, Abans and with respected builders. These are all well entrenched, sound companies that do not necessarily have to come into Sri Lanka. They come here because they obviously do not have to worry about volatility and they don’t need credit to fuel their operations. There is no exposure.
Q: About 90% of buyers are Sri Lankan. Do you think this trend will continue or moving forward, will the industry see more foreign buyers moving in?
A: I have, over the last decade, seen quite a number of repeat buyers. It is a natural progression of wealth and the broadening of that base, which happens in any well set economy. I’m reluctant to use the word thriving but Sri Lanka is growing and the ripple effects of that is seen in the wealth that is available for distribution.
Q: Is there not a danger of repeat buyers driving up prices and limiting accessibility for young, first-time buyers trying to find a price point they can afford on a middleclass salary?
A: I think that phenomena would occur when you talk about restricted land availability. There is a finite amount of land and this would push away aspirational buyers, but that would happen in terms of real estate because prices are linked and land prices are a component of that. The only redeemer in this situation would be the condominium, because if you do not have it, then quite opposite to what is feared, the land prices would go far higher. On two acres of land we are building 404 apartments. If we build houses the maximum number would be 53 houses, which would not be possible because the construction can only cover about 65% of the land and there have to be access roads. That would reduce the number to about 34 houses. Condominiums are really the answer to the land problem. The city of Colombo has narrow roads and traffic is a massive problem. We are seeing a trend where people are even keeping apartments for weekday living, and we are seeing families coming back from the suburbs.
Q: Are you concerned about the affordability of apartments?
A: That is more of a generic national problem. The cost of land is high. Therefore, if people buy land outside central Colombo then the cost of transport and time is high. If you try to build a 2000 square foot house in Colombo that would cost you more than an apartment. Our apartments started at $ 400,000, now because we have sold 70%, the cheapest available is $ 525,000. Reason for the steep increase is twofold. One is availability, because the apartments are at higher levels and therefore they are more expensive and secondly, we have been pushing our prices higher. Altair is, I would say, among the best, but our prices are actually better than many other developers that are considered mid-range. Sometimes the larger developers help economies of scale filter down.
Q: Since the Government is the largest holder of land, several companies have appealed for the release of more land to build mid-range housing for middleclass or upper middleclass people. Would you agree with this observation?
A: Yes, this is a very valid request as there is a dire need for middleclass and upper middleclass housing within Colombo City limits or its’ immediate suburbs, and with well-designed condos, it will not take an overabundance of land to provide at least a modicum of a solution. For example, as little as 20 acres (even in separate blocks) could conservatively cater to as many as 9000 middleclass apartments or 7000 upper middleclass apartments. Of course there would have to be a rational in releasing lands to selected developers; perhaps “a Swiss challenge” method of selection. Quite apart from the delivery of a civic obligation, the Government would also save traffic infrastructure and lessen fuel wastage.
Q: Coming back to the luxury segment, don’t you feel that there are doubts regarding its sustainability?
A: My concerted belief at the moment is that it is sustainable. We have met with the Central Bank Governor and raised our concerns. According to real estate analyst JLL, of the available condominiums as much as 98% of what is available has been absorbed and 47% of what is in the pipeline till 2022 has also been sold. The Central Bank in a preliminary study has found 99% has been absorbed and 70% of the pipeline has also been bought. So in that case where is the issue? I don’t quite agree with the 70% figure, I personally feel that is high, but it still means the industry is doing well.
Q: Do you feel apartments coming up in Port City would lead to a change in prices?
A: That is a different dimension altogether. The Port City is a different animal and it is not going to prey on or absorb the existing demand, necessarily. There vision is for it to be a nodal hub for the whole of South Asia and it is their challenge to put the different legislation, frameworks, and ramifications into play that will support that. Going by the way the Port City company is going about things, and the expertise they are tapping into both locally and overseas, and the seriousness and maturity with which they are approaching the project, you feel pretty comfortable they will achieve that. That does not mean our existing buyers will also not look at Port City but they will bring a different offering to the table. They will enhance the offering and broaden the field of play.
Q: Concerns have also been raised on ownership as some companies refrain from giving title deeds above a certain floor, particularly in areas such as Wellawatta. How do you view these issues?
A: That may be the case but that is the due diligence each buyer is entitled to. If you buy a car, you check to see if everything is okay. For Altair, our agreement with the Urban Development Authority (UDA) is a 99-year lease and that lease converts to freehold upon us completing the building and transferring ownership. We jointly, together with the UDA, transfer the ownership to the buyer. The 40,000 sq.ft. of retail space does not become freehold but can become freehold with another signoff by the UDA. We have not applied for that yet. From the sixth floor upwards its freehold.
Q: There have been reports developers are reducing prices to get pre-build deposits or are slashing prices. Have you seen such a trend?
A: I hope not. The stakes are too high. You have to have some real conviction that you are going to benefit out of the entire thing by dropping prices or discounting on a thing like an apartment. I think that is foolish and hope we will not see that happening, any vestige of desperation or tinkering with sales policy because of the fear of any bubble would be counterproductive.
Q: There have also been charges that large developers buy defaulted property directly from banks without going to the market and thereby get lower prices. What do you think of this?
A: I’m not sure of that. If that were the case, I don’t see a problem. If I really want land, then I should have the ingenuity to figure out banks hold premium land and approach them and see what I can negotiate. That is a negotiating tactic any developer can employ.
Q: Many international cities bring in laws to improve equal access to apartments in prime areas of a city such as regulating the number of vacant apartments and imposing rent controls. This is to ensure that people of modest incomes also have access to the same spaces and can enjoy the same standard of life. Do you feel similar steps could be taken in Colombo to create a more equitable city?
A: I don’t think the market has matured to the point that we need to bring in those kinds of controls. There have not been malpractices that push for such controls to be brought in at this point of time. However, in the future as the market develops and different sectors form and if there are concerns there is nothing wrong with doing that, but I don’t think there is an immediate need. It could be premature overregulation that could undermine growth. If the industry felt such regulations are necessary and if the controls were supportive and judicious, then we may support such measures, but if authorities get very rigid and unreasonable then there will be the natural resistance that any commercial industry would have towards unwarranted regulation.
Q: Experts have said a high percentage of private sector credit growth is directed at the construction industry and may need to be controlled for macroeconomic needs. Do you agree?
A: Such a situation needs to be carefully studied. We don’t know if there has been a proper identification or if it is an assumption. If it is the latter then we must find out what sections of the construction industry are being fuelled and it is the responsibility of the banks to also exercise due diligence in ensuring that the credit they dole out is used for the purpose that it is supposed to be. I think it would be very useful if banks go into this and indentify which segment, the luxury, middle, or low, could be vulnerable. Also, is it going to the developers or is it going to the purchasers?
Q: What policy measures do you see that would benefit the industry?
A: Granting resident visas was passed in the Budget but has not been implemented. We are contending with places like Malaysia, half the Middle East, the whole of the West Indies, Greece, Portugal, Malta, and Spain, where reasonable investment gives them residency. We are not even asking for permanent residency, we are asking for a reasonable resident visa. An investment in real estate is the most tangible of investments so what is the danger that we are afraid of? There is no vulnerability. This is a ghost that is being created. There was also a proposal for 40% mortgage but I don’t think that much is necessary because these people are not going to come and borrow at our high rates. However, if we can give about 20%, then it shows a bank or financial institution has done due diligence for development. That is the assurance and hand holding that foreign investors require and they are used to. Once they get to know there is no local bank willing to do that little bit of ground work for them, they walk away. Real estate could attract significant FDI for Sri Lanka. A back of the envelope calculation shows that high end real estate can attract a very conservative estimate of $ 150 million per year; that is around 25% of last year’s FDIs. So it is clear that real estate can be a key player in generating inflows, and in our view, demands to be looked at by the Government. What we should be doing is comparing Colombo with any other capital city, rather than Colombo with what it was 10 years ago. The reality is real estate in Sri Lanka has never gone down. Even through the height of the war, prices continued to grow; that has been demonstrated in the luxury segment, selling even at triple what they were bought for.
Taken from Daily FT
Moments captured during Vesak 2017 from Altair Residencies the Tallest residential project in Sri Lanka.
A view of the fireworks that went off during the celebrations from the 8th floor of Altair.
A visit to Altair, Sri Lanka’s architecturally unique twin-tower high rise was part of an on-going five-day study tour for architecture students of Dubai’s Amity University.
The group comprising of 30 final year students and two lecturers visited the Altair site at Sir James Peiris Mawatha, Colombo 2 for a conducted tour of the iconic structure with its distinguishing sloping and vertical towers.
This study tour is an annual highlight of the University’s curriculum for students of architecture. Last year’sstudy tour was to Singapore and included Marina Bay Sands, also designed by Altair architect Moshe Safdie.
“We were delighted to have these students, who were already familiar with Mr Safdie’s work, visit the site,” Altair Head of Sales & Marketing Jay Dias said. “Although the Amity University is located in a city known for its skyscrapers, both the students and their lectures were impressed by Altair’s design and distinctive structure.”
Now at its 58th level on the vertical tower and the 55th on the sloping tower, Altair will on completion comprise of a 63-storey tower which leans in to a taller, 68-storey tower. Acknowledged as a game changer in contemporary living in Sri Lanka, the Altair building has already brought a new dimension in aesthetics to Colombo’s skyline. It is intended to be a one-of-its-kind development in South Asia in terms of architectural design, structural engineering, and living experience.
Altair will offer its 400 apartments spectacular views of the Beira Lake, the Indian Ocean and the city of Colombo.
The development’s 1.5 million square feet of high-end eco-friendly living space will be supported by 40,000 square feet of supportive up-market retail space.
Taken from Daily News
Colombo’s architectural marvel Altair has announced that its 400 apartments will have floors finished in Italian Botticino marble, following a decision by the developer to upgrade from marble sourced from Central Asia or the Middle East, as originally proposed.
The upgrade at the developer’s own volition, represents a significant value addition at no extra cost to the buyers of the apartments, and demonstrates Altair’s commitment to exceed customer expectations wherever possible, the company said.
Towards this end, Altair Directors Pradeep Sureka and Pradeep Moraes recently visited quarries and processing facilities in Vincenza, Verona, Brescia and Chiampo in Northern Italy, the home of the best Botticino Marble, to handpick suppliers for the project.
Botticino Marble has very low porosity and ferrous content and is extremely hard and robust, making it ideal for installation in the humid conditions of Colombo.
“Our commitment to customers was to provide marble from Central Asia or the Middle East,” Moraes said on his return to Colombo. “However, we are constantly looking at ways of improving our offering, because Altair is intended to be the benchmark in luxury living in Sri Lanka.”
He said Altair has already pleasantly surprised buyers of its apartments by over-delivering on several promises by offering them numerous value additions including extensive home automation, chilled water air conditioning, double-glazed windows, Duravit sanitary ware from the Philippe Starck designer range, a concierge-serviced Reception with Quintessentially Lifestyle and free hotwater.
“Although about two thirds of the construction has been completed, it is our intention to continue to upgrade our offering wherever opportunities arise,” Moraes added.
Now at its 57th level on the vertical tower and the 53rd on the sloping tower, Altair will on completion comprise of a 63-storey tower which leans into a taller, 68-storey tower. Acknowledged as a game changer in contemporary living in Sri Lanka, the Altair building has already brought a new dimension in aesthetics to Colombo’s skyline. It is intended to be a one-of-its-kind development in South Asia in terms of architectural design, structural engineering, and living experience. Altair will offer its 400 apartments spectacular views of the Beira Lake, the Indian Ocean and the city of Colombo. The development’s 1.5 million square feet of high-end eco-friendly living space will be supported by 40,000 square feet of supportive up-market retail space.
Taken from – Ceylon Today
The latest images of Altair, soon to grace Colombo’s skyline with luxurious living. Scheduled to open in 2018.
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
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.
Taken from FT.lk
The latest images of Altair, soon to grace Colombo’s skyline with luxurious living. Scheduled to open in 2018.