Invest in real estate, developers

Sound investment to overcome currency rate fluctuation:

Ramani KANGARAARACHCHI

Leading players in the construction industry and property developers urge the public to invest in real estate as now is the exact time to do it.

“There is a misconception amongst the public that real estate prices will come down. On the contrary they are going to escalate by over a 100% due to price increases in material, labour, transport, overheads, service connections, as well as the new tax levied by the Government where 5% of the total construction cost has to be paid to the UDA even before construction starts” Managing Director Sanken Lanka, Ranjith Gunatilleke said at a joint press briefing held at the Nawaloka Auditorium on Tuesday.

“Real estate has always been a good investment as currency rates keep fluctuating and urged the public to invest their monies in property development.

“Real estate has been proven to be one of the best investments in this country for over two decades and land prices are known to escalate no matter what” Gunatilleke said.

He said for the past 18 months they had not had a single new Apartment construction project whereas previously they would tender on an average for at least 2 -3 new projects every month.

“Recently however some developers have been unable to meet their payments to contractors as they are unable to sell their apartments, while some developers have been forced to stop construction mid way. Buyers are expecting real estate prices to come down, this is not going to happen, they will only escalate,” he said.

Gunatilleke stated that the economic situation in the country, the worsening security situation which makes people think twice before investing in apartments both as a second home or city home as well as an investment, the shortage of cement, the absence of skilled labour and the escalating price of raw materials as reasons for this situation.

“The enforcement of a 5% tax of the total construction cost which came into effect about one and a half years ago has virtually put a halt on any future construction and this coupled with the escalating price of raw materials has had a negative effect on the construction industry as well as for property developers”.

General Manager Nawaloka Construction, Kalana Alwis said today people spend a significant amount of time traveling, wasting both time and fuel.

It makes sense to have a second home in Colombo, particularly an apartment which could be locked up when not used.

“Not only is there the convenience factor but you also have an investment which appreciates almost daily”, Alwis said.

Chairman Benison International Dr Sunil de Silva said his development project, namely 189 Residencies on Baseline Road had seen an appreciation in land value of over 100%.

“In 2004 a perch was valued at Rs 1.2 million, whereas now the price is Rs 2.5 million for a perch. Steel which at that time cost US$ 400 per tonne is now US$ 950 a tonne, therefore as an investment there is no way you can lose as land and housing are appreciating rapidly”, de Silva said.