Sri Lanka’s economic downturn hits realty marketApril 22nd, 2008 - 4:03 pm ICT by admin
By P. Karunakharan
Colombo, April 22 (IANS) Although the real estate market is up and vibrant in Sri Lanka, property developers have complained that the industry has been badly hit due to “the downturn in the economy”, a media report said Tuesday. According to the state-run Daily News, the developers have said that “there has been a drop in condominium (apartment) sales” with the banks reluctant to fund the projects.
“All developers are experiencing a difficult time as there is a downturn in the economy. This is a short-term crisis and things will turn around. I am going ahead with the ‘Rajmarine’ construction,” P&A Developers managing director and chairman A.E. Pararajasingham told the newspaper.
The Board of Investment has approved several condominium projects, resulting in several modern high-rise residential buildings adorning Colombo and its immediate outskirts with several million-dollar investments.
According to the developers, over 90 percent of the buyers of these super luxury apartments are locals, including Sri Lankans working abroad, who expect the quality of their apartments to be on par with the ones in world capitals.
Expressing similar views, Sunil de Silva, who heads Benison International Property Developers, said “the high inflation rate” had badly hit the housing market. Bank interest rate has gone up from 11 percent to 22 percent per annum.
“Most buyers who purchased apartments recently are now unable to pay their outstanding payments due to the current economic situation in the country,” Silva said.
“As property developers our challenge is to settle our bank loans,” he said, adding he had to launch a special marketing campaign to sell 23 remaining apartments.
“All our buyers are local professionals such as doctors and lawyers. However, we had to delay our next project due to unfavourable market conditions. Today construction cost has increased by 100 percent,” Silva said.