Iconic commits $50m to serve middle market housing in SL

• Plans on three, low-rise, semi-luxury and affordable luxury projects in Rajagiriya and Colombo
• Works on an aggressive land scouting at present
• Sees potential in burgeoning middle-class for affordable luxury within Rs. 10 to Rs. 30m range
• Says Colombo housing stock remains underdeveloped 
• Calls on for consistent policies and regulation

 By Charumini de Silva

Leading South Asian property developer, Iconic Development Ltd., reiterated its confidence in growth outlook of the Sri Lankan real estate sector announcing a fresh commitment of $50 million in the next few years to cater to the underserved housing gap in the middle segment at present.

“We are planning to invest $ 50 million for semi-luxury and affordable luxury projects in Rajagiriya and Colombo. Right now we have identified land for three new developments, where investments will range of around $20 million,” Iconic Development Ltd. Managing Director Rohan Parikh told journalists in Colombo.

He said the property investments will come from a Singapore based investment vehicle – ANP, part of Apurva Natvar Group which has affiliates in India, Oman and Sri Lanka.

Considering their previous experiences in constructing high-rise buildings that take a longer period to both plan and generate returns, Parikh said the three new developments will take the form of eight to ten floor low-rise buildings. 

“We feel that current need is for quick, small and affordable housing developments. We are now concentrating on eight to ten floor developments, which will include semi-luxury in the Rs. 20 to Rs. 40 million range and affordable luxury within the Rs. 10 to Rs. 30 million range,” he added.

He said the firm was doing very aggressive land scouting at present and as soon as they finalise on the lands immediate work on planning and designing will start to commence projects. 

Pointing out that there is a real need of the burgeoning middle class for affordable luxury within Rs. 10 to Rs. 30 million range, Parikh asserted they were keen to serve this market.

“Fundamentally there is a housing gap which is existing in middle class, which is underserviced and we want to serve. Anything between around Rs. 10 million going up to Rs. 30 million is the range which desperately requires housing developments and there isn’t much coming up in that segment,” he stressed.

Based on their extensive experience around Asia and the Middle East, he said that a high quality, well-priced product is always in demand. “While we are aware of the significant challenges facing the Sri Lankan economy, our decision to become active in this market was based on the fundamental strengths underlying Sri Lanka’s economic growth,” he added.

Relative to capital cities in the South Asian region, Parikh also said that Colombo remains relatively underdeveloped in terms of housing stock and lowest in price, which makes unavoidable for further residential apartments to be constructed. 

He called on for consistent policy and regulation particularly in the areas of traveling infrastructure, planning, taxing strategies and custom duties. 

Parikh also said cost per square foot in Sri Lanka is the highest in South Asia and as a result of revisions to Government policy over the past year, including the removal of tax concessions for real estate development, newer entrants into the apartment development industry will find it difficult to compete with established players. 

In terms of travelling infrastructure, he commended Government efforts in building elevated roads and LRTs, which is essential for real estate sector development would to be carried out at a rapid pace to match growing demand.

Pix by Lasantha Kumara