Sri Lanka’s CSE to see infrastructure bonds and REITs soon

Dec 04, 2015 (LBO) – Sri Lanka’s Colombo Stock Exchange (CSE) chief said that new products in the form of infrastructure bonds and REIT’s will be introduced to broaden and add depth to the islands debt markets.

“New products need be brought in, Sri Lanka’s debt market needs to be broadened and depth needs to be brought in,” Vajira Kulathilake, chairman Colombo Stock Exchange said.

“But that will not be enough we need to broaden it further so that infrastructure bonds can be issued soon on the CSE.”

He was speaking at a ceremony held in Colombo to mark the 30th anniversary of formally setting up the Colombo Stock Exchange. Kulathilake said that Real Estate Investment Trusts or REITs, a type of property fund will also be added to the CSE soon.

“Similarly we will go for REITs,” he said.

“This is very important to get exposure to the real-estate side of things and investments – people can’t have real estate at the moment because it is too expensive and REIT’s can be used to take real-estate to the general public.”

Analysts say that there are is a new market space opening up around this core to serve institutional investors, real estate firms and Real Estate Investment Trusts (REITs) with the boom in Sri Lanka’s property market.

REITs can own and manage properties and investors receive the income from these properties through dividend distributions.

Experts says that there are many benefits of investing in REITs which include higher dividend yields than for shares, they are bought and sold on exchange just like shares and lower costs than buying and selling property directly.

Data shows that in 2009 the luxury housing stock stood at 783 units and by 2015 the number has gone up to 2,657. By the end of 2018-19, the numbers are expected to hit 6,000, when projects such as Altair, Shangri-La, Colombo City and 96 Iconic are completed.