Skyline in Colombo to change rapidly with new malls, 7.5 mln sq. ft space by 2019
Ms. Roshanie Jayasundera-Moraes, Sunil Subramaniam and Ravi Abeysuriya at the panel discussion.
Surging property prices, rising rentals and demand seen growing for corporate space in Colombo and the suburbs were among a host of interesting issues that surfaced at a recent panel discussion on the real estate market. There was general agreement that joint marketing of the property markets through overseas roadshows was necessary to market the new corporate space.
Panellists Sunil Subramaniam, Head – Transactions, JLL Sri Lanka; Roshanie Jayasundera-Moraes, Executive Vice President and Chief Marketing Officer of the JKH Property Group; and Ravi Abeysuriya, Group Director/CEO – Candor Group brought to the table many aspects of the property and rental market at last week’s monthly meeting of the Sunday Times Business Club (STBC). The forum was on “Sri Lanka’s real estate market: Present and future trends” at the Kingsbury Colombo, the club’s host hotel. Mr. Subramaniam, an expatriate property consultant at JLL, said the Indian interest in the Sri Lanka property market as well as the Chinese interest was growing at present.
High rise buildings
He said most of the top high rise buildings in Colombo have been sold out and added that the Tata housing complex (at Slave island) will add another 400 units in the near future along with 17,000-18,000 units in other parts of the country. “We have to showcase what Sri Lanka has to offer to international buyers in terms of the highways, port expansion and the airport development projects.” Giving details of the trends, demands and ongoing and future projects, he said office space has generated a lot of cash flows to builders but lamented the absence of high end malls.
“Take for instance the Orchard shopping city in Singapore , we don’t have anything like that here. Even the present malls do not satisfy most foreigners but we are trying to market new buildings built by the conglomerates in Colombo.” Ms. Jayasundera, who not only spoke on JKH’s mega blueprint Cinnamon Life coming up at Slave City but also trends in the city, said according to current data Sri Lanka has five million houses which is expected to rise to six million by 2030.
100,000 new houses per year
“The demand for houses is 100,000 per annum. We also see the demand for housing shifting from traditional houses to condominiums for convenience and for security reasons. Owning an apartment is also affordable and the only way to own a piece of land in the city.”
She added, “We had five people living in a household in 1980 and four persons in 2010 and the number is going down further.” She said government offices are now moving towards Malabe and Battaramulla. Owing to the expressway, Galle has developed suddenly sending up property prices.
Property prices in Colombo 7 have gone up to Rs. 17 million from Rs. 12 million a perch, earlier. Property in Kollupitiya is around Rs. 7-8 million a perch and most of the property prices are skyrocketing in Colombo city. “We only have 11 per cent of the land for productive use and that is why the prices are going up.” She said that JKH actively promotes commercial office space. “We estimate 1.4 million office units to come up within the next four years (from our developments). We are also targeting the MICE market,” she said.
Indian weddings
Indians were looking for 300-500 room capacity for weddings and other functions and “we don’t have the capacity to cater to that market,” she said, while showing – at the same time – a video presentation of JKH’s iconic Cinnamon Life development which would, on completion, offer a gigantic 4.5 million square feet of space. Asking the question “Is it time to invest in real estate?” Candor Group’s Abeysuriya went on to state that real estate is a popular investment as it was a hedge against inflation, was popular among pension and insurance funds and attracted international investors.
He said housing demand is expected to rise exponentially with an estimated 1.5 million housing units required in the next 15 years according to the national housing policy. He said the recent removal of the 15 per cent land leasing tax for foreign investors, reduced levies on hotels and travel industry will have a positive impact on the real estate sector. He said Colombo’s high end residential property has experienced a boom and could become a bubble according to available research. “We could see an oversupply of semi-luxury / luxury apartments by 2020 due to demand not been able to keep up with planned supply. A majority of high end properties are bought by investors for rental yield and with the hope to sell at a higher price and not by end users,” he said adding that 7 million sq. ft. of property is set to hit the Colombo market by 2019.