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.
Rootcode wins Startup of the Year and People’s Choice Award at SAARC Startup Awards 2022
Rootcode, one of Sri Lanka’s leading tech companies, recently took home the “People’s Choice Award” in addition to being bestowed with the “Startup of the Year” title at the SAARC Startup Awards 2022. This regional recognition marks a significant milestone for the Sri Lankan tech space and workforce. Rootcode’s mission to build great tech is well underway, and it is gaining traction faster than ever.
This is the first time a Sri Lankan tech company has made a name for itself in the regional competition, and it is a watershed moment that has focused the global spotlight on Rootcode’s distinct approach to fostering innovation in Sri Lanka. This is also the first time that a Sri Lankan company was able to take home two awards of those presented at the SAARC Startup Awards.
Global Startup Awards SAARC celebrates the spirit of entrepreneurship and promotes bridging boundaries through innovation in its regions, which include Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, by recognizing them with its most prestigious awards program, attended by top-notch entrepreneurs, corporates, investors, and ecosystem builders from Nordic, Central Europe, SAARC, and ASEAN regions.
Every year, the SAARC Startup Awards bring together hundreds of South Asian startups, entrepreneurs, investors, co-working spaces, and accelerators to provide a platform to highlight trailblazers in the region’s startup world. Rootcode was chosen ahead of dozens of other regional tech startups in the competition.
Sri Lanka is a relative newcomer to the South Asian startup fraternity, and Rootcode’s ability to represent the country on the global stage not long after its inception is remarkable.
“We are extremely humbled and honored by the support shown to us at the SAARC Startup Awards 2022, and being recognized under two categories is a huge milestone for us,” said the CEO and Founder of Rootcode Labs, Alagan Mahalingam. “We have always been driven forward by excellence, collaboration, and integrity, which I believe is the reason why we have come so far and why Rootcode continues to grow every day.”
Rootcode is driven by its focus on helping businesses build great tech not just locally but globally, and its achievement at the SAARC awards stands as a testament to that. Despite the challenging times, this is a win for Sri Lanka.
INSEE Cement felicitates Sri Lanka’s youngest Commonwealth medallist
INSEE Cement awarded aspiring wrestler, Nethmi Ahimsa Fernando, who won a Bronze Medal for Sri Lanka at the recently concluded Commonwealth Games in Birmingham, LKR 1 million cash reward, to support her to pursue her passion. Suranga Kumara, her coach, also received LKR 250,000 cash reward, in appreciation of his contribution towards Nethmi’s recent achievements. INSEE Cement has also pledged to support Nethmi’s aspiration to represent Sri Lanka at the 2024 Olympic games, while also providing the entire cement requirement for the completion of her new house, which is presently under construction, in collaboration with the Manusath Derana initiative.
Textile maker Teejay knits strong start to 2022-23
Q1 revenue more than doubles to Rs 23.9 billion
Teejay Lanka PLC has made a positive start to 2022-23 posting Group revenue of Rs 23.9 billion for the three months ending 30th June 2022. The Group achieved nearly half its full-year revenue of 2021-22 in just the first quarter of the new financial year as a result of the low base of the previous financial year due to the impacts of COVID, the depreciation of the Rupee and the passing on of yarn price increases during the last quarter.
In a filing with the Colombo Stock Exchange (CSE), Sri Lanka’s largest textile manufacturer said it had also recorded significant growth in pre-tax and net profit at both Group and Company level in the quarter reviewed.According to interim financial statements, Group profit before tax for the three months grew by more than Rs 1 billion or 291% to Rs 1.5 billion, while Group net profit for the period was up 301% to Rs 1.2 billion.
At Company level, revenue improved by 108% in the quarter under review to Rs 12.9 billion, while profit before tax grew by 323% to Rs 1.5 billion, and net profit increased by 311% to Rs 1.3 billion.
Domestic debt restructuring will cripple EPF, ETF – JVP
Powerful CEBEU says yes to restructuring but on its terms
SJB opposes blanket privatisations
‘Dates have the highest sugar content to fight Coronavirus’
U.S. Congress to probe assets fleecing by US citizens of Sri Lankan origin
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