Sri Lanka condominium developers welcome budget 2017

Nov 22, 2016 (LBO) – Sri Lanka’s Condominium Developers Association which represents the condominium developers in the country has hailed the budget presented by the Finance Minister.

The association which is an affiliated trade body of the Ceylon Chamber of Commerce said in a statement that the budget contained a number of progressive proposals to stimulate demand from a new market segment to help absorb the increasing supply pipeline.

The association states that currently there are over 8,000 luxury apartments being constructed in the city of Colombo.

“It is important to attract foreigners/Sri Lankan diaspora to purchase apartments to absorb this supply,” the association said.

“An oversupply situation can be catastrophic to the property sector in particular and the economy in general.”

In the Budget speech the Finance Minister identified significant potential for Real Estate Investment Trusts (REIT), and agreed to facilitate the SEC in introducing amendments to the Unit Trust code.

The land Alienation Law was also relaxed by removing the restrictions on foreign controlled listed entities and now quoted Public Companies with foreign ownership exceeding 50 percent could purchase property and land in Sri Lanka.

“This supports the country’s development plans including the government’s Megapolis development initiative,” the association said.

“It is essential to attract FDI into the property development sector via freehold land ownership. Furthermore, public quoted companies whose shares are freely transferable with no control over the extent of foreign ownership, now could acquire property.”

Earlier, in October 2016 the VAT Amendment Act exempted the supply of Condominiums from Value Added Tax, thereby making apartments more affordable and creating an even playing field among different categories of condominium developments and developers who were earlier subjected to different VAT regimes.

 

Current Practice Proposal
Foreigners are not allowed to purchase      condominium property situated below the 4th floor.

Condominium property could be   purchased by foreigners only if the entire value is paid upfront through an inward foreign remittance.

Foreigners are allowed to purchase condominium property in the first 4 floors as well

Foreigners are allowed to raise 40% of the cost from a domestic bank.

The debt servicing must be from foreign currency.