by Nayana Mawilmada, Sector Head, John Keells Properties
Real estate in central Colombo has been inaccessible to a majority of Sri Lankans for quite some time. But if there was ever a window of opportunity to consider investing, now might be it.
With interest rates in Sri Lanka lower than they have been at any point in recent memory, fixed income options have drastically reduced, while the ever dependable and safe fixed deposit has become considerably less attractive after rates plummeted. So if you want your money to continue growing – or at the very least to preserve its value – real estate may be your best bet.
Investing in real estate, however, is not without risk; and in a crowded marketplace, potential investors should carefully consider their options. An understanding of the dynamics of city evolution may help.
The Future of Colombo
Colombo is a city of approximately 560,000 (within the Colombo Municipal zone), with about half a million more people commuting into the city every day. The traffic is mind-numbing. But why do people choose to spend literally years of their lives sitting through traffic?
Colombo is the epicentre of the country; most high-paying jobs, leading schools, hospitals, and malls among other social infrastructure are concentrated in Colombo. And this will likely remain the case for the next several decades.
Unfortunately, through a combination of limited affordability, lack of innovation in mortgage lending, sky high construction costs, and inadequate policy direction, the dream of home ownership in Colombo has eluded many. And thus, many learn to live with the drudgery of the daily commute.
While revamped public transport and infrastructure could change this picture drastically, that is still quite a way away from becoming a reality. What is almost certain in any eventuality is that Colombo prices will continue to rise – and if you have a bit of money to invest and get started, you can profit from it.
Even in the midst of a pandemic, the fundamental socio economic forces driving people to hover around Colombo will not change that fast. Cities provide economies of scale that make it easier to access (or distribute) resources and services.
The Mortgage Solution
Mortgages give people access, choice, and the ability to afford convenience. It is, therefore, vital that the housing finance industry begins to innovate.
At John Keells Properties, we have been focused on mortgages for a while now as a means to complement our offering at TRI-ZEN—the cutting-edge apartment community we are developing on Union Place. Our most recent innovation—the Freedom Mortgage—aims to give homebuyers and investors some breathing space and flexibility.
The Freedom Mortgage plan essentially ensures customers a two-year interest free period on their mortgage, with the customer paying 20% up front and the bank taking up the remaining 80%. Once that initial payment is made customers don’t need to make another payment for a further two years. After two years, interest payments begin, and capital repayments start three years after that. Interest rates are locked in at 8.75% for five years, or nine percent for 10 years with the Commercial Bank. Of course, selling the apartment and capturing gains on the full value still remains an option during this entire period.
When investing, location and timing are key
Humanity will survive the pandemic; and so will Colombo. While we may see a temporary slump in rental demand due to the pandemic and an exodus of expats, we will undoubtedly see that bounce back as well.
It’s important to keep an eye out for opportunities. Yes, interest rates are muted and FDs and other fixed income instruments available today will barely keep you above inflation, but at the same time mortgage costs are also low and banks are under pressure to lend, so you can get good deals on housing mortgages.
When property hunting in Colombo, proximity to the core (Colombo-1 and two), combined with the neighbourhood context, would be important in ensuring convenience and rentability. Picking a developer with the track record and strength to survive a downturn is also crucial, particularly if you consider a property that is under construction. Finding the right product match for your wallet and lifestyle is critical too.
Ultimately, if you pick the right real estate product in the right location, and have the discipline to look medium term and ride out the current turmoil, you will likely do very well.
HNB promotes cashless transactions; joins CBSL’s ‘Rata Purama LANKAQR’ campaign
Chief Guest for the event Money and Capital Markets and State Enterprise Reforms State Minister Ajith Nivard Cabraal, CBSL Deputy Governor and National Payments Council chairperson Yvette Fernando, and CBSL Payments and Settlements Director D. Kumaratunge with HNB Executive Director and Chief Operating Officer Dilshan Rodrigo as he completes a transaction via HNB SOLO at a merchant stall
HNB PLC, partnered with the Central Bank of Sri Lanka to promote the Colombo-leg of ‘Rata Purama LANKA QR’ campaign at Diyatha Uyana, to raise awareness and encourage the public towards cashless payments.
Having already linked LANKA QR to its digital payment app HNB SOLO, the bank was among other financial institutions and telecommunication partners in joining efforts to make cashless QR-code based payments the standard for mobile phones and digital payments countrywide, in moving towards a cashless and digitally-savvy Sri Lanka.
“We are entering a new era of financial technology, where almost all of our daily transactions will require no physical banknotes, but just a smartphone and internet connection with our bank account integrated to a digital payment app.
The Central Bank’s national directive for banks and financial institutions to adopt and integrate LANKA QR into their existing digital payment solutions has prompted an aggressive onboarding of merchants to the new payment solution across the country. With our extensive customer base, SOLO is no doubt a significant contributor to this innovative initiative,” HNB Deputy General Manager – Retail and SME Banking, Sanjay Wijemanne said.
The Colombo-leg of the ‘Rata Purama LANKA QR’ campaign raised awareness regarding SOLO’s many facilities, including zero human interaction, efficiency, and eliminated risks that influenced many vendors to come on board.
Sri Lanka Insurance posts a staggering revenue of Rs. 55.2 billion during 2020
Amidst the turbulent and challenging year Sri Lanka Insurance has closed year 2020 on a positive note recording phenomenal revenue growth with exceptional service innovations.
Sri Lanka Insurance the premier insurer to the nation recorded stellar performance in 2020 to record Rs. 55.2 billion revenue for the year, a marked improvement on the Rs.48.6 billion in the year 2019, a press release said.
It adds – In the year of 2020 Sri Lanka Insurance reported 30 % growth in life insurance premium increasing to Rs.19.2 billion whilst general insurance reported 7% growth in premium grew to Rs. 20.1 billion. The company achieved a combined Gross Written Premium (GWP) growth rate of 17 % during the year. General insurance contributed 51% towards the total GWP whilst Life Insurance contributed 49 %.
‘In continuing with its tradition of leadership, Sri Lanka Insurance in 2020 surpassed its own record to declare a sum of Rs.8.2 billion as bonus to policyholders. The cumulative life insurance bonus paid out during the past 10 years tops a massive Rs.54 billion making the SLIC bonus payout unmatchable.
‘As the national insurer we have witnessed yet another challenging year and the consequences brought out by pandemic outbreak urged us to conduct our business operations in a more empathetic manner. SLIC has always taken the lead to protect the nation and during this difficult time Sri Lanka Insurance launched many initiatives to sustain country’s health defenses while ensuring our customers receive uninterrupted insurance service.
‘As the pioneering insurance company in Sri Lanka we are in the forefront to inculcate the importance of insurance to the masses as a national responsibility on our shoulders. We will further strengthen internal capabilities to serve the nation through innovative and affordable insurance solutions which cater to all Sri Lankans under the ‘Insurance for All” concept. Even though the times are defining we will continue protecting our nation turning obstacles into opportunities.’ noted .Jagath Wellawatta, chairman of SLIC.
Bank of Ceylon empowering nation with Lanka Q
The Bank of Ceylon in its mission to assist the government initiative to empower Sri Lanka through digital technology is joining the customer awareness campaign of Central Bank of Sri Lanka’s Lanka QR digital platform.
Bank of Ceylon had its most recent major awareness programs in Borella and Maharagama along with the other branches in Colombo District in line with the Central Bank’s main program held in “Diyatha Uyana” with the participation of all Lanka QR certified banks on the same day.
Central Bank of Sri Lanka (CBSL) has organized a series of awareness and promotion campaigns for popularizing Lanka QR with the participation of all Lanka QR certified financial institutions throughout the country with the aim of speeding up the customer adaptation process towards digital banking.
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