What does 2016 hold for investments in real estate?
As the New Year begins, the big question on all real estate
professionals' lips is: what will 2016 hold? Migration from capital
cities, infrastructure improvements and increased international interest
among investors are some of the anticipated developments for real estate
markets within emerging nations, including Sri Lanka.
According to Managing Director of online real estate platform, Lamudi
Sri Lanka, Hugh van der Kolff, 2016 will see the development of Sri
Lanka's smaller cities.
"The government must invest in these cities to improve transport
services, water and electricity supplies, and develop infrastructure so
that they can compete with Colombo, on an international scale," he said.
"In these cities, with lower land, resource and building costs;
investors get a better return on their investments. This makes these
second tier cities a very attractive option for real estate
professionals," van der Kolff said.
Industry professionals have noted the increased attraction of second
and third tier cities in emerging urban areas. Rapid population growth
has led to physical growth of urban areas in cities including Colombo,
Jakarta, and Manila.
As larger cities slowly saturate, real estate developers and
investors alike are turning their attention to cities such as Kandy and
Galle. In second and third tier cities, property is significantly
cheaper as a result of higher land availability and lower building
Commercial property growth. As countries such as Sri Lanka experience
rapid population growth, urbanization, and economic development, the
demand for commercial property is increasing. This includes mixed-use
developments, shopping malls, retail space and office units.
The next 12 months may see an increase in commercial property
development across Sri Lanka, and neighbouring countries, as the sector
must accommodate population and tourist growth, and increased interest
among international corporations.
These projects are not only driving economic growth, they provide
employment opportunities, and boost the value of surrounding properties.
Will 2016 be the year of the Real Estate Investment Trust (REIT)? The
past 12 months have seen a number of real estate investment trusts
opening in emerging markets, encouraging investment in the sector.
In October, 2015, Kenya's Capital Markets Authority approved the
country's first income real estate investment trust, also known as I-REIT,
to be issued by investment manager Stanlib Kenya.
This marks the first ever licence to an asset management firm, to
list on the Nairobi Securities Exchange (NSE). In June, Pakistan's first
ever REIT was launched, paving the way for expected growth in the
country's commercial property sector.
More emerging nations are expected to follow this lead over the next
12 months. Following the announcement in Sri Lanka's 2016 Budget,
industry experts forecast the creation of the country's first REIT, to
encourage local and international real estate investment.
Laws are changing in many of the emerging markets. While it is still
not legal for foreigners to own property in all countries, new
legislation is being drawn up to encourage real estate investment.
Finance Minister Ravi Karunanayake hopes to remove the 15 percent
land leasing tax for foreign investors, which is expected to have great
impact on the local real estate market. The removal of land lease tax
for foreigners is expected to increase international investments to the
App focus. Mobile is driving innovation in developing countries.
Internet users in these countries are skipping traditional desktop use,
and moving straight to mobile. While 2015 saw more emerging
markets-focused companies developing their Internet presence, 2016 will
see real estate professionals turning their attention to apps.
As a result of high costs of Internet services in many developing
countries, apps are increasingly popular when it comes to interacting
with online companies. As Internet penetration strengthens in
second-tier and suburban areas, reduced mobile connectivity costs, more
affordable SIM cards and the evolution of mobile technology are driving
- Lamudi media release