Sri Lanka warns against investing in foreign real estate projects

Sri Lankan authorities have frowned on advertisements promoting investments abroad in real estate projects and warned strict action over irregularities.

On Friday, the Central Bank (CB) issued a statement strongly advising the public not to be misled by such advertisements published in the print and social media, which promote overseas property investments, and also offering guidance on obtaining foreign financing for such purposes.

Legal action shall be initiated against any person involved in or facilitating such unauthorised foreign exchange transactions.

The statement said the CB has recently observed advertisements published in the print and social media that promote overseas investments in immoveable properties (overseas property investments) among Sri Lankan resident individuals.

The banking regulator drew the attention of the public to strict regulations governing overseas investments.

It said according to the Regulations and Orders issued under the Foreign Exchange Act, No. 12 of 2017 (FEA):

•       Resident individuals are not permitted to make payments to acquire or invest in overseas property except where payments for such investments are made from the Personal Foreign Currency Accounts (PFCAs) up to the limit of US$20,000 or equivalent in any other designated foreign currency.

•       Payments for overseas property investments from Business Foreign Currency Accounts (BFCAs) maintained by resident entities/individuals are not permitted. 

•       Further, resident individuals are not permitted to obtain foreign loans or raise financing from non-residents for any purpose including overseas property investments.