Condominium Sector under serious threat – CDASL
Condominium Developers Association of Sri Lanka (CDASL) say that they are being held to ransom by suppliers of building materials, fittings, fixtures and even services to an extent that the continuity of this vital sector is under serious threat.
The US Dollar has doubled against the Sri Lanka Rupee and Freight rates have also gone up considerably by 200%. Due to these Floor tiles that were Rs. 150 sq. ft in 2021 are today Rs 450 to 600 and more over have a delivery time of 4 months with no guarantee of prices being held. Steel which was Rs. 110,000 per ton in 2021 is now Rs. 450,000, cement at Rs. 800 per bag is now 3,100 and fittings and fixtures are regularly showing 500%+ appreciation.
It is also ironic that some of the primary materials are manufactured in Sri Lanka and others have a high degree of local value addition and are thereby not impacted by exchange rates or increases in freight charges.
“Nonetheless, these too reflect and share the skyrocketing inflation of finished imports,” a CDASL Press release said. The recent introduction of an investment linked Residential Visa facility (Golden Visa )is welcomed and can bring USD to Sri Lanka and could lead to increase of apartment sales as well.
Whilst all agree that quantum increases in tourist arrivals would be an effective panacea for Sri Lanka’s ills, the irony is that should promotion efforts meet with success, there wouldn’t be sufficient rooms to cater to the demand.
There are an estimated 40,000 beds in the Hotel sector and 50,000in the so-called informal sector. The relationship between Real Estate and Tourism is huge. “Take the example of Phuket in Thailand which prior to C-19 was registering 14 million tourist arrivals per annum at its peak. Tourism industry analysts agree that the long-term sustainability and growth of tourism in Phuket were significantly boosted and supported by Condominium Development.
The Condominium Industry can with little effort but subject to an enabling framework generate as much as USD 150 million or 20% of realistically achievable FDI, placing it on level with other significant earners of FDI who have been recognized as contributors and supported in a meaningful manner for decades.
The Condominium and Construction Industry directly employs over 600,000 people, (dependents of 2.4 million) and indirectly employment generation is perhaps in excess of 1,000,000 people and their livelihood is being subverted by short-sighted policies of greed and unfettered profiteering.
The whole would be much bigger than the sum of its parts should Sri Lanka be marketed as a holistic entity catering to myriad investment interests.
The CDASL also said that it is a misconception to think that Prices of new apartments will reduce and there could be “forced Sales” at vastly reduced Prices due to this crisis. .
Completed Apartments that are on offer can never be offered for the same price in the future as construction costs have doubled/ tripled or even quadrupled depending on percentage of construction already completed. The following points were forwarded by the association to develop the industry.
Firstly, the pragmatic realization that further taxation such as the re-imposition and increase of input VAT and Social Security Levy are short sighted, ineffective and ill thought-out measures which will have an effect contrary to its objective. Secondly a rationalization of the multiple layers of para tariffs, such as PAL, CESS, Excise Duty, etc. Thirdly a review of protectionism and the revisiting of negative lists and restrictions which severely impair quality standards.
Fourthly, a change to the mindset that Condominium and Apartments are “Luxury Developments”, is for the rich, and therefore can be pushed into extinction. As mentioned earlier Condos are the solution towards cost-effective conservation of resources and the enhancement of low/middle-class urban lifestyles country wide.