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Condominium developers see silver lining



Despite Covid-19

By R P A Perera

Covid-19 has had a drastic impact on Sri Lanka’s economy. That countries around the world are also reeling with the effects of the pandemic is of little consolation. It is interesting though that condominium developers with completed projects or those nearing completion with full inventory are likely to reap large benefits.

The industry which took a major hit with the Easter Sunday bomb attacks in Colombo, in April 2019, began recovering last year. RIU – a multi-sectoral research company with a global presence with offices internationally – in its Annual Real Estate Market Report 2019-2020 states that the market which remained sluggish in 2019 due to a variety of reasons, began to recover in 2020.

Providing a look into the future, CEO and Founding Director of RIU Roshan Madawala said, “We can note that the industry had performed with tenacity and resilience during the past 1 ½ years, despite the extraordinary economic challenges. Within the next 5 years, Sri Lanka could face an under-supply of apartments and other real estate assets due to a combination of variables which would essentially navigate it towards establishing a sellers’ market. This situation would have been somewhat unthinkable even 24-months back.”

“The research and data that we are analysing now suggests that the present time is exceptionally propitious for residential real estate investments,” Madawala continued. “In 2020 and 2021, low-interest rates stimulated the market to enhance the absorption rates of the prevailing stock of apartments in Colombo. Simultaneously combined with the diaspora’s interest levels gathering to an all-time high and with airports slowly reopening, the influx of buyers will be significant. The market is more appealing than ever before to persons earning greenbacks, British pounds and most other currencies, due to the weakening rupee. The amalgam of these variables and the novel reality faced by developers, whose costs have spiked due to the new import restrictions and subsequently the overall currency depreciation effect, indicates that developers will find it impossible to supply the next generation apartment projects at prices that tally with the present market. Therefore, the likelihood of an undersupply is real.”

Dr M A K Sriyalatha, Senior Lecturer, Department of Business Economics, Faculty of Management Studies & Commerce, University of Sri Jayawardenepura commenting on the effect of the import restrictions and currency devaluation on the real estate market said, “Restrictions and devaluation affect the prices of imported raw materials and it automatically affects property development such as real estate residential house prices in the short-term. But LKR priced units have become much cheaper making them more attractive to foreign investors. Real estate players with unsold or built-but-unsold inventory will benefit through the sale at higher prices.”

“What’s more, the interest rates are at a historic low, with the real interest rate being negative recently. This makes real estate investments more attractive in 2 ways, i.e. borrowing to invest is more feasible, and the returns generated are more attractive,” she added.

“Share prices and profitability of pureplay residential real estate companies providing high quality products are likely to improve over the price and profitability of commercial real estate developers, given the working-from-home concept being widely used. The larger the projects and the inventory, the higher the profit. A house of one’s own could not only be an asset but could also provide safety,” Dr. Sriyalatha said.

“We live in a VUCA (volatility, uncertainty, chaos and ambiguity) world driven by rapid technological advances that impact all aspects of human activity and markets,” RIU CEO Madawala continued. “However, real estate has traditionally proven itself as a safe haven during such times and in 2020/21, Sri Lanka’s real estate market has proven its resilience. Commercial and retail real estate will however need to navigate a more fluid and challenging environment in the short-medium term.”

Quality and trust are of paramount importance in the residential real estate sector. Naturally, established players with a good track record are at an advantage. The developers’ brand, stability and financial strength are all critical since real estate developments generally are long-term developments, (i.e., they take a few years to complete from the launch), investors therefore need to be comfortable with the stability of the developer and the ability to complete the project. Even in the current circumstances, the larger players are more likely to be able to withstand the adverse conditions due to their greater financial stability.

Industry players who have large projects which are nearing completion or where the major portion of the construction and the import of materials is already sourced or procured, are likely to enjoy significant profits and these may be reflected in their share prices.

Mr. Brahmanage Premalal, Group Chairman Prime Lands (Pvt) Ltd, commenting on the demand for condominiums said, “The demand for real estate in Sri Lanka, especially residential condominiums continued to surge throughout the year, as investors were seen rushing to take advantage of the reduction in policy interest rates announced by the CBSL as part of its monetary policy easing measures in the wake of the pandemic induced economic slowdown. Similarly, the ban on vehicle imports and the ongoing devaluation of the Rupee also appeared to be fueling the interest in real estate, which I believe, were a few of the other contributory factors that worked in favour of driving up the demand for condominiums. Further as it is with the import controls & increase of prices in raw materials the actual benefit is for the buyers as they get much higher returns. We see this phenomenon all over the world as the real investment against the inflation & high money supply is investment in real estate”.

Some industry players are also hopeful that the project developments within the Port City which are expected to commence soon will bring in a higher demand specially for the developments in Colombo and the suburbs, since the expatriates will require accommodation to overlook construction and development.

A handout prepared by the government directed at potential investors outlines various development initiatives supporting the theme, Sri Lanka is the Rising Star of Asia. Among them is the development of beachfront luxury villas at the Port City Colombo. A significant feature is that foreign investors are permitted 100% ownership of the real estate investment. Access to sites and temporary utility facilities (water and electricity) are already available while permanent utility connections are to be provided by June 2022. END.

The author is an independent writer and could be contacted on for more information.

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ESOFT Metro Campus holds Graduation Ceremony 2021



Dr. Dayan Rajapakse – Chairman and Managing Director of the ESOFT Group (Right) presenting a certificate to a graduate

The Annual Graduation Ceremony of ESOFT Metro Campus was held at the Bandaranaike International Memorial Hall (BMICH) on the 23rd and 24th of November 2021. A total of 1,800 students graduated at this year’s event. Successful students received their Pearson BTEC Higher National Diplomas, Pearson Level 7 Qualifications, London Metropolitan University (UK) Degrees and MBA’s, Kingston University (UK) Degrees and MSc’s.

It was held across two days and split into 9 sessions, to be in full compliance with health guidelines. In addition to the conferring of degrees, batch tops were awarded gold medals and special awards were made to the top achievers of the programmes.

Keynote addresses were by an eminent group of academics and industry leaders including Mr. Conard Dias CEO, LOLC Finance PLC, Mr. Thushera Kawdawatta – CEO, Axiata Digital Labs, Dr. Dayan Rajapakse – Chairman and Managing Director of the ESOFT Group, Dr. Sampath Wahala – Chairman, Sri Lanka Accreditation Board, Mr. Tishan Subasinghe – Managing Director and joint Managing Partner Moore Stephens Consulting (Pvt) Ltd and Moore Stephens Aiyar, Prof. A.A.C Abeysinghe – M.Phil. PhD Programme Coordinator, Senior Lecturer Faculty of Management & Finance, University of Colombo.

Foreign delegates from the University Partners were present virtually and delivered their speeches and wishes for the graduates via video. The Virtusa careers team were also present on both days in order to provide career opportunities to the young and successful graduates. ESOFT prides itself in producing graduates who are work-ready and able to take on the challenges and opportunities presented by the new economy.

ESOFT has a rich history of 21 years and is the largest private sector higher education network in Sri Lanka, and offers a variety of programmes through an extensive island-wide network of over 40 branches and serves over 40,000 learners each year in a range of programmes from school leaver courses to postgraduate programmes.

ESOFT partnered with Kingston University London in 2012 to offer undergraduate and postgraduate qualifications in engineering and soon established a dedicated College of Engineering in Katubedda. In 2013, they partnered with London Metropolitan University to offer a range of programmes leading to undergraduate and postgraduate awards in Computing, Business, Hospitality, and Travel & Tourism. A range of MSc programmes in IT and an International Doctoral programme for IT, Science and Engineering research areas, has also been introduced via Kingston University.

The ESOFT Group has won local and international awards from Pearson (UK), BCS (UK), NBQSA, National Chamber of Commerce, Federation of Chambers of Commerce of Sri Lanka in recognition of their academic excellence and business performance. Their pinnacle accomplishment was to be recognized by the Sri Lankan Government as a Non-state Degree Awarding Institution in 2019.

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Coconut industry products raking in forex to the tune of $ 7000 yearly – State Minister



By Steve A. Morrell

Earnings from exporting coconut products amounted to $ 7000 annually. Such exports include jaggery and treacle, which are key products relating to the coconut industry, State Minister of Coconut, Kithul and Palmyrah Cultivation Promotion Arundika Fernando said.

Although coconut, as part of the plantation industry, was not given due recognition, it was now a distinct contributor to forex earnings and was of significant importance to the economy of the country, Fernando said.

The State Minister added: “Development of the coconut plantations includes value addition promotion to its various products, which are now key to sustaining the coconut plantations.

“Such development included propagation of 600,000 nursery plants for distribution among smallholders and large-scale plantations to add further progress to the industry. As a result, the coconut industry is part of the mainstream economy.

“The coconut industry made a substantial financial contribution to the economy of the country. Value addition in all products was key to development. Coconut products, used extensively in allied local industries, were contributors to value addition. This is efficiently handled by the private sector.

“Collaboration with the Jaffna University was on-going to develop kitul and palmyrah.

“Soil testing and further inputs were envisaged for development.

“Export markets would include Europe, Canada and the US. This is particularly true of kitul treacle and jaggery. Value of these exports would reach approximately $ 2 million.”

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INSEE Cement’s 360-Degree Approach Eases Cement Shortage in Sri Lanka



Operating at maximum production capacity with optimized distribution channels for a number of weeks, INSEE Cement has successfully helped to mitigate the cement shortage that was prevailing in the local market. INSEE Cement’s concentrated and immediate contingency measures across its entire operation at the onset of the shortage ensured an uninterrupted market supply of cement, while also logging a record-high 700,000 MT production output during the third quarter of 2021 for the company.

“As Sri Lanka’s leading cement manufacturer, INSEE Cement took on the responsibility to ensure the local construction industry’s post-COVID-19 revival remained on its trajectory,” stated Gustavo Navarro, Chief Executive Officer at INSEE Cement Sri Lanka. “We continued to fully support government regulations and industrial policies to first stabilize the market, and were able to deploy our island-wide distribution and dealership network to ensure an uninterrupted supply across the island. The loyalty and patience of our customers gave us that extra encouragement we needed to overcome the challenge.”

INSEE Cement operates at a 3.6MT maximum capacity, with a 1.5MT production at the Galle plant, a 1.3MT output from the Puttalam facility and a 0.8MT import capacity at the Colombo Cement Terminal. To mitigate the shortage the company introduced two more additional import vessels to its logistics operation to accelerate production and distribution cycles.



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