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Real estate investments in Sri Lanka
Altair team at LPS (Luxury Property Showcase) Shanghai-China from 6th – 8th December 2019
“Cities must have iconic buildings and structures; this is key to a city’s uniqueness and character,” says Mohandas Saini, Managing Director and CEO of Shapoorji Pallonji International. Akin to how Manhattan is defined by the Empire State Building, Kuala Lumpur by the Petronas Towers and Dubai by the Burj Khalifa. Saini made these remarks on one of his periodic visits to Colombo to review Altair’s progress, scheduled to complete in end-2019.
S & P CEO Mohandas Saini
Shapoorji Pallonji & Co. Ltd., regarded as one of India’s most valuable private companies with a legacy spanning over 150 years, is no stranger to such iconic construction projects. The company was the main contractor of the tallest residential development in India, the 60-story ‘Imperial Towers’ in Toledo Mumbai, completed in 2010. Other iconic projects by global construction giant include the palace of Sultan Qaboos Bin Said Al Said of Oman, Park Towers Dubai, Taj International Hotel Mumbai and the Hilton Riyadh.
Altair, adjudged the best condo in Asia for architectural design at the 2018 Asia Property Awards, was designed by Moshe Safdie, a pre-eminent architect of our time. Safdie’s works can be found across the globe and have become revered regional and national landmarks, including Yad Vashem Holocaust Museum, Jerusalem; Kauffman Center for the Performing Arts, Kansas City; United States Institute of Peace Headquarters, Washington DC; and Marina Bay Sands Integrated Resort, Singapore.
The unique design of Altair incorporates a 63-story inclined tower connected to the 69-story vertical tower via a strong outrigger at the 39th level. At the height of 240m, the vertical tower is now the tallest residential building in Sri Lanka
The inclined tower utilises structural steel diagonal grids on the exterior of the building giving a permeable surface for expansive floor to ceiling windows as well as acting as a load bearing membrane, minimising the use of interior columns. According to Mohandas Saini, these unique design features led to a particularly complex project from a construction standpoint due to the high degree of precision work required to maintain uniformity that cannot be achieved through traditional fast-tracked methodologies that are commonplace now in high-rise construction in Sri Lanka. Despite the challenges, the superstructure construction work was carried out at a commendable speed with ‘one floor added almost every week’, notes the CEO.
Commenting on the outcome of the superstructure works Saini remarks, “The entire weight distribution was so well engineered, and the workmanship is of such good quality that the level of deviation from original specifications were substantially lower than allowable structural engineering tolerances.”
Structural engineers to this project have been Dubai based Predag Eror of Derby Design, and well known Sri Lankan structural engineer, Deepal Wickremesinghe. Structural elements of the building were independently verified by the University of Moratuwa.
The CEO also says that Shapoorji Pallonji has earned their global reputation not only for their expertise in construction, but for their enduring commitment for the projects they undertake. “We believe in long-term value-added relationships with all stakeholders, often investing our own money in projects we undertake, as we have done so in Altair.” The main shareholder of this $ 250 million project is Kolkata based South City Group, a consortium of firms which has collectively delivered over 150 real estate projects consisting of more than 15 million square feet.
Along with Altair, Shapoorji Pallonji is involved in four other projects in Sri Lanka, including an office building and a water supply project. The CEO remarked that his company is considering engaging in a public-private partnership with the Government with regards to another key project and are open for further investment opportunities in the country.
Speaking of his experience of working in Sri Lanka, Saini says that local engineers have excellent skills and expertise. However, the company had to resort to employing a large foreign workforce due to the shortage of skilled labourers and specialised technicians in the domestic market.
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.
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
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.
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 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.
Otis has been selected to provide high-speed elevators to the prestigious Altair project in Colombo, Sri Lanka, which when complete will be the tallest residential building in Sri Lanka and will have the country’s fastest elevators. Otis, the world’s largest manufacturer and maintainer of people-moving products, is a unit of United Technologies Corp. (NYSE: UTX). Elevators Private Limited, a JV entity between Otis and Aitken Spence, will install the elevators.
Altair will reach 240 meters — 68 floors — consisting of two towers with one tower leaning against the other. Indocean Developers (P) Limited, a venture of South City projects (Kolkata) Limited, chose Otis to supply a total of 19 elevators, including Sri Lanka’s fastest elevators with a travel speed of 5 meters per second.
“Altair is a unique project with requirements that stretch beyond the ordinary – it is exclusive. Otis’ technical know-how and credentials gave us the confidence that would be the right fit” said Pradeep Sureka, Director, Indocean Developers (P) Limited.
“Otis’ worldwide experience in delivering vertical transport solutions in tall buildings, coupled with their strong local presence, made them the right choice to provide us with elevators for Altair,” said K. M. Sathian, Director (Projects), Indocean Developers (P) Limited.
Extracted from Times of Oman
A large number of Omanis are turning to Sri Lanka to invest in property, infrastructure development and the farming sector, officials said.
Speaking to Times of Oman, Anselm Perera, CEO of Business Process Outsourcing Services LLC (BPOS) Oman, who coordinated one such delegation, claimed Sri Lanka became a good place for investors after the civil war ended on May 18, 2009.
“Since then, we have seen a surge in investors from around the globe,” he noted.
The team coordinated by Perera was led by Saeed Saleh Saeed Al Kiyumi, chairman of Oman Chamber of Commerce & Industry.
Besides investing in farming, Omanis are also buying residential properties in Sri Lanka. “The Omani delegation which visited Sri Lanka also held discussions with reputed high-rise residential development agency Altair about buying some apartments,” he added.
“People are investing as they can expect rental yields of 8 to 10 per cent and capital gains of more than 10-12 per cent in the luxury apartment sector in Sri Lanka,” Perera said. Further, investors receive capital gains on the resale of apartments, which in some cases are tax free for foreign nationals.
Designed by architect Moshe Safdie, Altair is offering 400 apartments with 1.5 million square feet of living space supported by 40,000 square feet of retail space. The building is scheduled for completion in 2017.
Interestingly, tourist arrivals in Sri Lanka from Oman have also been increasing in recent years. “Besides business travel, we are expecting around 20,000 tourist arrivals from Oman in 2016,” said Deepal Pallegangoda, Country Manager Oman, Mihin Lanka, said.
In 2015, 14,216 tourists from Oman visited Sri Lanka. “Because of the economic crisis, many people are shunning holidays in Europe and looking for cheaper options, like Sri Lanka, where they can get greater value for their money,” travel agents stated.
Altair, Sri Lanka’s iconic luxury residential high-rise development launched to a receptive crowd in Maldives this week. In an event held at Hotel Jen in Male, Altair team along with it’s local partners DAMAS Real Estate made presentations to prospective apartment buyers.
The event has already managed to create significant media buzz with several media outlets immediately publishing stories of the event. These include articles in Vaguthu, Haveeru, Avas and the Sun.
Being an Iconic development designed by celebrity architect Moshe Safdie, Altair offers a unique value proposition for foreign buyers as a lucrative investment opportunity as well as a luxury living arrangement in one of the tallest buildings in South Asia.
The Altair team is in Maldives till the 17 of June 2015 and can be contacted on +960 7502908 or +960 7503945
More Pictures from the event courtesy Vuguthu
