Sri Lankan real estate and property sector is likely to recover from its current uncertainties with more people considering it, once again, as a prudent investment option.
Most industry officials the Sunday Times FT spoke to concurred that this is an ideal time to purchase a property, due to the fact that at present the market is in a depressed state and it is virtually a buyers market. With peace returning to the country and the people in the North and the East moving freely, property prices especially in areas like Colombo, Kandy, Galle, Matara and its immediate suburbs, etc are coming down and the market is already witnessing increasing demand, property developers and Urban Development Authority officials said.
Prices of real estate have come down which is why this would be the ideal time to invest in this market, Secretary to the Ministry of Urban Development and Sacred Area Development. Dr. P. Ramanujam told the Sunday Times FT. However, he noted that there are several other constraints such as customers’ perception on property investments being very negative with some experiencing difficulties due to stagnant projects and many of them seeing real estate companies collapsing due to financial difficulties.
He added that there is vast potential for real estate and property development in the North and East after the restoration of peace ending the war. He pointed out that the government is extending every assistance for foreign investors to invest in property development. He disclosed that the government has authorized private sector property developers to undertake to build 21,200 housing units on 883 hectares of land in the Western Province in 2010.
Bede Fernando, Managing Director /CEO of Nation Lanka Finance PLC said this is one of the safest sectors to invest in, particularly in the current economic climate where there is turbulence in almost all investment instruments after the global financial crisis.
He was however optimistic of the future appreciation and upward movement in property rates given the fact that over the last seven years under normal circumstances land prices have been increasing at a minimum of 20% per annum. He said that there will always be increased demand for a commodity with a limited supply, particularly one that cannot be replenished. He noted that with the reduction on bank loan interest rates, the most safest and viable investment will be in the property development and real estate sector.
Kithsiri Wanigasekara, Executive Director of Abans Financial Services Ltd, expressed optimism that the real estate market will improve by at least 50 % in the coming years with the reduction of interest rates and other economic factors.
Thushara Weerasooriya, Director Real Estate of Ceylinco Finance PLC, said that the current growth rate of the real estate sector has declined to 7 % during the past one and half years against 20 % in 2007. The high interest rates and less affordability have negative impacts on the demand. He said that land prices vary from place to place. When there is a high urbanisation price escalation of lands will be increased. “Today we have noticed land prices are high in areas like Malabe and Kaduwela.
oralesgamuwa and Piliyandala,” he added. Industry sources say around 350,000 people are in need of middle class housing units with the demand expected to rise to 650,000 units over the next few years.
Bathiya Satharasinghe, Executive Director of People’s Reality Ltd also reflected similar views of an ‘ideal time to buy’ market.
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