- Constrained land availability, favourable demographics and growth in per capita income levels cited as key factors
- Experts say vertical living will help maintain ecological balance saving forests and vegetation
ICRA Lanka, a part of Moody’s Investors Service, assigned a bullish outlook to Sri Lanka’s burgeoning real estate sector with higher prospects for vertical living being envisaged with limited availability of land.
In a rating report on Prime Lands Residencies (Pvt) Limited, a part of Prime Group, the rating agency said the limited land availability, favourable demographics stoking demand for housing and the rising middle income class would act as important catalyst to drive the real estate sector in the short to medium term.
“The real-estate sector in Sri Lanka is expected to have a favourable long-term outlook given the constrained land availability, favourable demographics of the island and the growth in the per capita income levels,” ICRA Lanka stated.
The rating agency assigned Prime Lands Residencies (Pvt) Limited, a fully owned subsidiary of Prime Lands (Pvt) Limited, its first time rating of A- with a Stable outlook. The rating action was on the premise of strong operational and financial linkages between the two companies and the healthy cash collection efficiency and strong pre-sale levels of the group’s geographically well diversified portfolio of residential projects.
“Prime Group’s forecasted future cash flow levels, which are characterized by healthy operating profit margins and strong customer advances, provide further comfort to the assigned rating,” the rating agency added.
Prime Lands is the real estate market leader in Sri Lanka with over 25 years in business and also the leader in the affordable luxury apartments segment operating in 18 districts.
“The apartment segment is a relatively recent development in the property sector of the country, and the total apartment units in Colombo currently account for only 3-4 percent of the total housing units in the city.
“Going forward, ICRA Lanka expects the apartment segment to witness significant growth, backed by increasing urbanization levels,” ICRA Lanka said.
City planners have been advocating for vertical living for long, specially within Colombo city and its periphery but policy makers have done little to avert negative externalities of haphazard urbanisation happening in Sri Lanka, which has created significant imbalances in the society and economy.
Although a case for vertical living has limited relevance in the provinces and remote areas, experts and environmentalists have shown that vertical living could save forests and vegetation and will help maintain ecological balance instead of clearing acres of forests for horizontal living.
In a recent interview, Prime Group Chairman Brahmanage Premalal explained how cities and city states like Kuala Lumpur, Singapore, Ho Chi Minh City and Hong Kong have been successful with vertical living.
“The most important factor we should not forget is that Sri Lanka is an island. It is obvious that land stays fixed while the population continuously increases. The population of Colombo stood at 6 million in 2017 and is anticipated to grow at a rate of 1.1 percent. This alone is a sufficient reason to believe that vertical living is the future of Sri Lanka,” Premalal was quoted as saying.