‘Now is the time to buy’ is the chorus of property experts at Lanka Property Show 2019

From left: Capital Heights Director Rajitha Jayasuriya, Capital Trust Chairman Tushan Wickramasinghe, Prime Group Chairman Brahmanage Premalal, Candor Holdings Group Director Ravi Abeysuriya, KPMG Head of Deal Advisory and Real Estate Advisory Shiluka Goonewardene, Lex Duco General Manager – Marketing and Design Consultancy Ashan Dinithikara, and Daily FT Editor and CEO Nisthar Cassim

Sri Lanka’s flagship real estate event of the year, the Lanka Property Show 2019, was concluded successfully, drawing praise from both exhibitors and visitors. The event, which was organised by one of Sri Lanka’s reputed property web portals LankaPropertyWeb.com, is the largest property show in the country and was held recently at Kingsbury Hotel. 

This year’s event also comprised of a very perceptive panel discussion themed ‘Real Estate Market Outlook of 2019’, which was moderated by Daily FT Editor and CEO Nisthar Cassim and included industry experts who discussed about the status of the property market and its prospects. With many property developers, exhibitors and buyers all gathered for a mutual purpose, there was an abundance of experts to liaise with and many insightful discussions were held throughout both days.

It was also an ideal time and platform for anyone who was looking to buy property to find great deals on sale prices to invest, since the 15% VAT on apartment sales is expected to come in to effect from 1 April, which is around the corner.

Prime Group Chairman Brahmanage Premalal said: “The need is always there in affordable luxury segments which we cater to mostly. The biggest challenge in property sales is how you deliver the product, managing the costs on top of the taxes and bank interest.”

When asked about how the property market can be more robust and affordable, Candor Holdings Group Director Ravi Abeysuriya stated that: “Cost is a major issue for the developer as well as the buyer. The way the Government is managing the macro-economy, interest rates are moving up. If you look at the rest of the world, they have brought in financial instruments like Real Estate Investments Trust, where you can attract trillions of dollars. As a country, we need these kinds of factors to attract foreign investors.”

Capital Heights Director Rajitha Jayasuriya spoke on a few reasons as to why projects delay in the construction industry. She said: “Labour shortage is one of the major reasons in Sri Lanka for the delay, it’s not available to meet the demands of the construction industry. It is a major reason why many projects go to other foreign contractors like China, India and Nepal to overcome this situation. The labour market in Sri Lanka needs to be more productive and ready to embrace new expansion.”

A major topic discussed by all panellists was: ‘Is there a bubble in the property market?’ 

Tushan Wickramasinghe said: “People must understand that the majority of our population is in Colombo which is 11.3% of the total Sri Lankan population. It is impossible to make houses for all these people. In my opinion, there will be a shortage of apartments in the next couple of years.”

Premalal further added to that saying: “We are talking about a very small segment of 2000 to 2500 luxury apartments in the next two to three years. The people who are building these apartments too are well established financially and are sound companies. Due to the overall political and economic factors, there was a slowdown, but the industry is picking up and I don’t see a bubble coming.”

KPMG Deal Advisory and Real Estate Advisory Head Shiluka Goonerwardena spoke on the currency depreciation last year and how will it have any impact on the developers going forward. 

Another critical question looming was regarding the VAT and how it will impact the market, and will there be any incentive that could be provided to the customer once it comes into effect. Jayasuriya debated that: “If it is introduced, the developers can absorb a portion of it, which can be claimed as S-VAT, so may be 10% or whatever the percentage will be passed on to the customers, so it depends on how each developer calculate their price.”

Abeysuriya, adding to that: “Even in other countries you get VAT, but not on housing and apartments. VAT in Sri Lanka is a completely wrong strategy.”

Attracting foreign investors to Sri Lanka is something we all look forward to as a nation. Premalal mentioned that: “The best way to do this is to offer a Resident Visa program, we already proposed this in the Budget to allow Residence Visas to foreigners who brings in at least $ 300,000, which was not implemented. Another factor is to look to make Sri Lanka a retirement destination. If we have proper policies applied, we can sell all our apartments. Best way to attract investments to this country is to offer FDI’s instead of introducing VAT.”

The discussion was concluded with Premalal, Jayasuriya and Wickramasinghe all agreeing that now was the best time to buy before VAT coming in to effect, and due to the fact that as land and material prices have increased along with the currency depreciation, developers won’t be able to offer properties at the current prices in future. 

In a separate interview at the event with Access Group Chairman Sumal Perera, he said that the bubble was a “false alarm” and it was not the oversupply that was the issue, but the lack of confidence in the market. He went on to further say that, similar to what happened with the textile industry in the last decade, good, reliable and financially sound developers will remain in the market to take the sector in to the future. 

Commenting on the future of the apartment market, Perera went on to say that apartment living is here to stay with people opting to live close to where good facilities, transport links and better quality of life can be found. “Buy what you can hold for 10 years, otherwise make a lifestyle change to pay for loans” was his advice to property buyers at the event. 

LankaPropertyWeb Managing Director Daham Gunaratna said that: “This year’s event was the biggest to date, in terms of the number of stalls being taken and visitor numbers. It also turned out to be a success for the participants with the number of sales, reservations and leads also showing an increase since the last show.”

During his welcome message, Gunaratna too said that LankaPropertyWeb has made great strides towards promoting Sri Lanka to foreign investors and would continue to do so this year with further property events panned in overseas key markets in the coming months.