“I have the perception that the current focus of developers lies on the luxury or premium market,” said Hugh van der Kolff who leads the Sri Lankan branch of ‘Lamudi’, a global property listing.
“In the short term, I would say that luxury or premium market sector is seeing quite a bit of demand, thus it would take some time for the supply to meet the demand,”
“With current developments coming up, it seems that the top segment might be satisfied sooner than the higher or mid income segment,”
“The market for higher or mid income housing that currently can't afford to stay close to their office is under served and has a great potential for the future.” Kolff told LankaBusinessOnline.
Globally founded on 2013, the property portal currently available in 32 countries across Asia, Africa, the Middle East and Latin America with more than 550,000 property listings in Asia and Latin America alone.
The company recently raised 18 million US dollars by merging its businesses in Asia and Latin America.
The listing which offers sellers, buyers, landlords and renters a secure way to find or list properties online; opened its Sri Lankan branch mid last year.
‘www.lamudi.lk’, on site search data for the month of December 2014 is suggesting that three fourth of its property hunters are looking for houses.
“75 percent of our searches have been for houses while apartments have been searched for by 14 percent.” he said.
The data also shows that it has received 69 percent of total searches from Colombo district with Gampaha claiming the second position bagging 13 percent of searches.
Kandy district has attracted 10 percent of the total number of searches in December.
When it comes to specific areas in Colombo, 23 percent of searches have been generated from Colombo 05, 16 percent from Colombo 03 and 14 percent from Colombo 06.
According to Kolff their local web site has attracted over 92,000 visits last month with 80 percent of which generated through the island itself.
“The rest is from overseas; largest segments being USA, UAE and UK. Even a few days ago, we got calls from Korea and Italy, requesting details about properties listed on our site.”
With the end of a three decade of civil war, not only Sri Lankan expatriates but also foreign individuals and companies seek property investments in developing Sri Lanka.
Island’s protectionist laws have currently restricted foreign nationals and companies owning freehold land in the country by enforcing exchange control regulations.
“It's a common practice in most Asian countries where foreigners currently can't buy property.” Kolff told LBO.
However Asian economies like Korea, Malaysia, Taiwan, Singapore and Thailand allow foreign freehold land ownership under certain conditions.
Earlier, foreigners had to pay a deadly 100 percent transfer tax to Sri Lankan authorities which ended up with foreigners trying to purchase lands through local nominees.
Outsiders currently have access to state and private land only through long lease arrangements subject to payment of a land lease tax.
“It restricts foreigners to acquire land, however with the maximum of 99 years for leasing of land there is quite some options for foreigners to invest.” Kolff revealed.
Apart from revenue to the government, these restrictions act partially against undue demand forming through higher speculation.
Critics say excessive speculation coupled with high growth prospects may increase prices even triggering bubble-like behaviors.
“I don't think there is direct risk for practices like ghost cities as in Ordos in China, where excessive speculation led to whole cities being unaffordable for locals.”
Property price deviations from their long-term trends not always caused with speculation.
Real income, interest rate and population growth are among other factors affect property prices directly.
“It is quite difficult to say yet, if it is excessive here. I believe it's a matter of supply and demand and it seems for people actually going to use their properties,”
“Current demand in normal family housing is high and driving people to live more out of the city centre, Colombo.”
Kolff who headed the Myanmar branch early said the European property market is seen cooling down over the years.
“In contrast, the Asian market has seen an increased investment in recent times,”
“Developing nations such as Indonesia, Philippines, Myanmar and Sri Lanka have actually seen an upward trend in the real estate sector in the past few years,”
“Ordinarily, people want to live in a safe and pleasant environment. This seems to be a bit more possible in developing nations today, since the disposable income of the middle class community has increased, lately.” Kolff further said.