Real estate sector records impressive growth

By Sanjeevi Jayasuriya

The improved economic conditions and the condusive environment for business has resulted in more investments in tangible assets.

The real estate sector has recorded impressive growth as more investors were keen on acquiring value appreciating stocks moving away from conventional instruments.

The market for real estate in Sri Lanka has shown a significant growth phenomenon since 2009.

This is evident by the marked increase in price levels of real estate including bare lands, housing, commercial premises and condominium style apartments, Trillium Residencies Chairman Janaka Rathnayake told Sunday Observer Business.

"The increased interest by foreign investors in prime blocks of commercial lands in Colombo, the acquisition and resale of leisure properties by private investors and a general increase in confidence levels of household investors has fuelled the development of Sri Lanka's property market since the end of terrorism," he said.

The changing landscape of Sri Lanka's real estate market could be further explained by the shifting lifestyles of real estate buyers including broader acceptance of apartment living, cities becoming accessible and equipped with modern infrastructure and a growing leisure sector across a number of districts.

Further transformation is will take place in Colombo which is becoming a picturesque, while remaining a commercial city which could emerge as a trade hub for South Asia, he said.

Excerpts of the interview.

A number of opportunities could result from the development of Sri Lanka's real estate market for the institution and the person. Recent growth trends have shown increasing activity in the construction industry, housing, property sales and apartment projects.

People have benefited from increasing property prices and continue to invest in tangible real estate assets.

Our economy is developing visibly, especially in infrastructure which is necessary for holistic development.

The huge improvement in the road network, ports and airports being built with new facilities being added and the vibrant stock market which is based on strong fundamentals are signs of economic development.

Plus factor

The low interest rate regime is a plus factor for economic development.

The business community is largely encouraged by the enabling environment and the low interest rates which have enabled the private sector to show improvement on a year-on-year basis.

The next best thing to happen is the environment created for investment in land and property where we see an upward trend. Many people and corporates are turning towards investment in real estate as a price bubble is unlikely to take place in Sri Lanka.

The investment is real estate and properties could be considered as tangible investments where potential investors can analyse many factors before arriving at a decision to invest. This is the trend at present.

The developing of land and property by the Urban Development Authority is commendable. Over 30 percent of Colombo land is occupied by unauthorised people. The re-settlement of these dwellers is taking place at present, making prime land and properties available for future development.

Investment

The boom in the real estate sector has taken place due to two reasons. One being finding suitable living accommodation and the other is that it has become a secure mode of investment.

When it comes to accommodation, the trend is for people to opt to live in apartments. Apartment living is completely different to that of normal houses. It is more convenient due to easy maintainence, security and an opportunity to live in a gated community within a secluded environment.

Popular

Therefore, apartment living is becoming practical as has happened in most developed countries. Though, in Sri Lanka it is at the infancy stage, all indicators point to it becoming popular in the future as land is becoming scarce.

Most of the luxury apartments offer many facilities such as swimming pool, mini super market, jogging tracks, gymnasium and club house.

Within the next ten to fifteen years we could see many of the people in Colombo living in apartments as there are many luxury apartments that are coming up.

The Trillium brand is one of the most successful housing projects in the country.

With the growth momentum in the real estate and property markets continuing, we have seen unrealistic prices (price bubble) in land in Colombo 3, 4 and 5. However, with the time it will stabilise to realistic levels, due to the infrastructure development taking place which will give people more choice.