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Sri Lankans ploughing into Rs 75m plus apartments, reviving sales
View(s):By Kapila Bandara
There has been an uptick in sales of apartments priced above Rs 75 million in Sri Lanka in the second quarter, compared with the preceding three months, a market report shows.
Most sales are in the Colombo District followed by Gampaha and Kalutara districts.
Sales are rising in a low interest rate environment and most buyers are resident Sri Lankans.
The monetary policy easing cycle began in June 2023. For builders, financing costs have dropped substantially.
Apartments in the Rs 75m plus category that changed hands made up 19% of all transactions in the quarter compared with 8% in the first quarter. Still, apartments in the Rs. 25-Rs 50m range accounted for the largest chunk of sales, or 54%, data from the Central Bank of Sri Lanka ‘Condominium Market Survey’ for the second quarter show.
In the same quarter, prices of homes and lands have also increased.
In contrast to the second quarter, sales of Rs 75m plus flats made up 6% in the first quarter, and 5% in the final quarter of 2023. And in the third quarter of 2023, sales in the category were 4%, past data indicate.
And as the economy shrivelled by 8.4% year-on-year in the second quarter of 2022 following the national bankruptcy, sales of Rs 75m plus units made up 18%.
Average prices in relation to 15,000 ads on Lanka PropertyWeb.com though not an accurate picture, indicates Rs 84.2m for a three-bedroom apartment in the third quarter. Land is Rs 1.9m per perch.
Even in a crisis, apartments for some, are an investment, a hedge against inflation, and an alternative to a punt in the share market.
Interest from Sri Lankans means luxury projects continue to sprout, especially in Colombo.
Developers are pouring billions into condos.
Prime Lands Residencies Plc, which built The Grand – Ward Place, has invested Rs. 3.2b in apartments in the financial year ended 31 March, 2024. Pre-sales advances were Rs. 1.1b. Of the total revenue of Rs 8.09b, apartments generated 6.54b, filings show.
Some properties at Cinnamon Life by John Keells in Colombo 2, where there are more than 420 luxury units of 1,200 plus square feet, have been listed online priced above Rs 138m. At Tri Zen also by JK, prices start from Rs 57.6m. At Luna Tower on Union Place, prices are from Rs 70m.
The private real estate portal, Lanka Property Web noted in an earlier real estate market report that in Colombo’s Central Business District, the average asking price per square foot for luxury apartments has risen by 48% from 2018 to 2023. Colombo 6 was the top choice for overseas buyers, while locals favoured Colombo 2.
They estimated more than 8,000 new residential apartments will come on the market by 2026 and forecast a total 42,000 plus units overall.
In an environment of evolving regulation and corporate sustainability reporting, including building energy use, emissions reductions, and minimum energy performance standards in leading economies, as well as updated requirements from the Financial Action Task Force for tighter anti-money laundering and beneficial ownership regulations, Sri Lanka’s real estate market has low transparency.
Disclosure is weak in particular in regulatory and legal, and transaction process, despite political boasts of digitization and Artificial Intelligence.
Global consultancy JLL ranks Sri Lanka at 63 out of 89 countries in its benchmark transparency index for global investors, developers, and occupiers etc. Sri Lanka ranks below the likes of Zambia, Botswana, and Egypt. United Kingdom, France, the United States make up the top three.
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