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Sri Lanka Real Estate
While the painting of the Altair structure continues the fixation of glass windows also continues while the 63rd floor infinity pool and the sky garden are taking shape.
Click to enlarge
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.
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.
Contrary to popular perception, apartments currently account for only 1.7% of Colombo’s residential facilities despite the scarcity of land to cater to rapid urbanisation, an industry leader has disclosed.
Representing Altair as a Director of the iconic development and the Condominium Developers Association of Sri Lanka (CDASL) as its Chairman, Pradeep Moraes told the Sri Lanka Investment & Business Conclave (SLIBC) that even after the 12,000 apartments currently under construction are completed over the next three to four years, this figure would only rise to about 4 to 5%.
In contrast, apartments account for as much as 70% of living accommodation in central Kuala Lumpur, 80% of central Bangkok and 90% of central Mumbai, Moraes said.
Stressing that condominium living was the only solution to increasing urbanisation in areas like Colombo where land is in short supply, he pointed out that if the area occupied by the Altair project had been allocated for houses, it would have been able to accommodate 54 minimum-sized units at most, whereas the development’s twin towers offer 400 spacious luxury apartments, with as much as 45% of total space set aside for public areas, which is much more than the industry average.
The presentation, titled ‘Residential Condominium Market – Sri Lanka’ targeted principally at foreign delegates attending the conclave, highlighted both the emotional arguments and the business rationale that underpin the attraction of the property development sector in Colombo, the fastest growing city in the MasterCard Global Destination Cities Index of 2015.
Moraes also disclosed that 90% of luxury condominium purchases are equity based, and that on average, 65% of purchases are by resident Sri Lankans, 27% by expatriate Sri Lankans and 8% by foreigners.
Quoting the findings of the global real estate services firm Jones Lang Lasalle he said 98% of completed luxury condominium projects in Colombo are sold out, while on average, 47% of projects under construction are sold out. These findings aresupported by statistics from RIU (Research Intelligent Unit) whose corresponding figures are 99%and 49% respectively. In the case of Altair, more than two thirds of its apartments have been sold.
Altair was the Platinum Sponsor of the 2018 Sri Lanka Investment & Business Conclave, themed ‘Partnering for Prosperity.’ The event was attended by 131 foreign delegates, while 128 local participants were registered to attend. It was organised by the Ceylon Chamber of Commerce in association with four government ministries, the BOI, the EDB, the Department of Commerce and the Sri Lanka Conventions Bureau.
Altair Director Pradeep Moraes was interviewed by Oxford Business Group, in his capacity as the Chairman of the Condominium Developers Association of Sri Lanka on how the real estate market is adapting to market changes.
In what ways do you see the capital gains tax impacting the local real estate market?
Moraes: Seeing as 10% is a modest tax, the impact would be minimal. A number of other markets have much higher levels of taxation and still experience vibrant real estate growth. The tax has been implemented in a clear and open way, the figure has been made public, and now the market can factor it in and go about its business.
Is there enough purchasing power in Sri Lanka to support further developments in the luxury residential segment?
Moraes: According to global real estate consultancy Knight Frank, Sri Lanka recorded the second-highest growth rate internationally in the ultra-rich community in 2016. In our experience, luxury condominiums continue to be purchased with over 90% equity and without borrowing. Over 90% of such developments are in the relatively affluent Western Province, predominantly in Colombo. Additionally, 99% of luxury and ultra-luxury apartments in completed projects and around 51% of those under construction have been sold, according to investment management company JLL, with over 60% of both sold to resident Sri Lankans. Most of the larger projects have been undertaken by reputable international developers who do not borrow locally and have certainly done their due diligence.
Like many countries, Sri Lanka has a hugely inequitable distribution of wealth. This, combined with the previously relaxed tax regime, has led to a gross underassessment of wealth, some of which is sent overseas. Luxury real estate offers a desirable and commercially sound option for attracting these funds into the local economy. There is certainly enough purchasing power to justify further luxury developments.
How the profile of luxury residential property owners changing?
Moraes: The current profile is 60-65% resident Sri Lankan, 25-30% expatriate Sri Lankan and less than 10% foreign. The low foreigner count is because the purchase of residential property in Sri Lanka is not linked to residency privileges, unlike several countries in the Caribbean, South-east Asia, and the Middle East, as well as certain Mediterranean countries in the EU. However, this is now being remedied with a proposal to grant residency visas connected to investment.
The recently inked comprehensive free trade agreement with Singapore, together with the enhancement of the existing agreement with India and those being negotiated with China and Pakistan are expected to encourage business relocation to Sri Lanka, which should have positive effects on rental markets.
How has the market reacted to calls to restrict lending to the real estate sector?
Moraes: The Central Bank of Sri Lanka has engaged with all stakeholders and is satisfied that the real estate industry is not a cause for concern. It has broadcast this view, going on, in fact, to say that the luxury segment was the least vulnerable.
As with markets everywhere, mindset and speculative concern can and will affect performance, as was seen in Colombo with the six-month slowdown in sales in 2017. Thankfully, this has now corrected, and sales are proceeding satisfactorily once again.
What impact would the introduction of real estate investment trusts (REITs) have on the Sri Lankan market?
Moraes: The benefits of REITs would be phenomenal for both the industry and the economy as a whole. Investments could increase exponentially, as REITs facilitate the entry of small local investors who otherwise lack the means to purchase as an individual. They also reassure foreign investors that their purchase benefits from professional guidance and market knowledge.
The stumbling block to the implementation of REITs is the issue of the 4% stamp duty payable to the provincial councils. REITs by their very nature propagate multiple transactions and it was feared that the business model could not sustain repetitive taxation. However, evaluation undertaken by industry players, the Colombo Stock Exchange and the Securities and Exchange Commission points to the aggregate of capital gains and rentals providing a cumulative return that remains attractive.
Therefore, steps are now being taken to revive the formulation and implementation of REITs, based on this belief in their viability and the scope for their productive participation in the Sri Lankan capital market.
Originally published on Oxford Business Group Website
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
The latest images of Altair, one unique luxury residential projects in Sri Lanka, soon to grace Colombo’s skyline. Scheduled to open in 2018.
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.
The latest images of Altair, soon to grace Colombo’s skyline with luxurious living. Scheduled to open in 2018.