New entrants to apartment development industry will face difficulties: Developer

May 29, 2017 (LBO) – Sri Lanka’s newer entrants into the apartment development industry will find it difficult to compete with established players as a result of revisions to Government policy over the past year, including the removal of tax concessions for real-estate development, a South Asian property developer said.

Iconic Developments (Pvt.) Ltd, stated that it anticipates an impending contraction in supply and an increase in demand, meaning that the market’s best window for investment into the real-estate sector would be within the next three year horizon.

Acknowledging the fact two notable high-end developers had failed to get their projects off the ground, resulting in limited negative ramifications for lending to the sector, the developer noted that the significant majority of real estate development was in fact being driven by real demand for quality vertical living in and around the Colombo district.

“Relative to capital cities in the South Asian region, Colombo remains relatively underdeveloped in terms of housing stock,” Rohan Parikh, Managing Director, Iconic Developments said.

“It is therefore not only unavoidable that further residential apartments will be constructed, it is also imperative.”

Parikh cited key macroeconomic indicators such as steady GDP growth, and a rising per capita income, which as at the end of 2016 had increased to US 3,835 dollars, noting that such indicators pointed to increasing quality of life, and with it an increased demand for quality residential spaces.

Particularly in the context major parallel infrastructure developments such as the Western Region Megapolis and the Colombo International Finance City, he noted that real-estate sector development would have to be carried out at a rapid pace to match growing demand.

“On the global stage, Sri Lanka’s international profile is one the rise. The unprecedented boom in the tourist sector is in many ways a short-term indicator of the country’s long term potential. Over the coming years, people will continue to be drawn to Sri Lanka, not just to visit, but also to live and work in a booming economy.

“In that regard, the approach towards investments and development must factor in the needs of the medium-long term. Hence our goals as a property developer are therefore in alignment with this vision for Sri Lanka and we are confident that it can be realized,” Parikh said.

“Naturally regulation and prudent management of investments and risk will be crucial to success hence we hope to do our part to extend and deepen dialogue between stakeholder groups and the Government with a view to achieving a viable, mutually beneficial outcome.”

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