The budgetary proposal to allow foreigners buy condominium properties from any floor of preference as opposed to the current condition that restricts them to the fourth floor and upwards was hailed by the industry.
In a statement last week, a spokesman for the Condominium Developers Association of Sri Lanka, an affiliated body of the Ceylon Chamber of Commerce, indicated that this was a step in the right direction and termed it a ‘progressive’ move by the government to stimulate demand from a new market segment to help absorb the increasing supply pipeline.
“There are over 8,000 luxury apartments being constructed in the city of Colombo. It is important to attract foreigners and the Sri Lankan diaspora to purchase apartments to absorb this supply. An over-supply situation can be catastrophic to the property sector in particular and the economy in general,” a spokesman commented.
When inquired about the proposal, industry veteran and Chamber of Construction Industry Sri Lanka, (CCI) founder president, Dr. Surath Wickramasinghe said that this was in fact a ‘brilliant idea’ as it gives the buyers the option of choosing between better accessibility and a good view.
“This new proposal can be viewed as a timely measure because a lot of these ‘foreigners’ who opt to buy condominiums are actually Sri Lankan expatriates who are seeking to own a second home. Some prefer to buy from lower floors as they are better accessible, even by elderly persons or those with physical disabilities,” he said.
Chairman and Managing Director of Fairway Holdings, Hemaka de Alwis was also of the opinion that the proposal was a positive move as it gives foreigners a better choice to buy apartments in bona fide developments.
He, however, said that it is unlikely that this proposal’s implementation will have a major impact on the industry as the demand for condominiums from foreigners at present is almost insignificant.
“I would say that it is a very negligible percentage when it comes to foreigners in the absolute sense. The foreigners who we are currently attracting are actually Sri Lankans domiciled overseas. In their case, in some developments, it can be as much as 50%, but in most developments, it will be much less. Our market is still mostly driven by local sales. We are not attracting real foreigners like in the case of Malaysia, Singapore and other Asian destinations,” he said.
He said that the most likely to benefit from this proposal are those who develop small apartment complexes in Primary Residential Zones.
According to him, the real challenge facing the industry at present is dealing with the over-supply situation in the ‘ultra luxury’ category (defined as JLL as apartments that are Rs.60 million and above) predicted for the ensuing years.