Overseas Realty (Ceylon) PLC reported strong top line performance for the three months to March this year amid strong sales of apartments in the final two phases of the Havelock City project.
Kicking off the March earnings season this week, the real estate juggernaut reported over 200 percent increase in apartment sales during the three months ended in March 31, 2021 (1Q21) compared to the same period last year.
The sale of apartments, which predominantly consists of Havelock City Phase 3 and Phase 4 residential towers — the project’s final two phases under the residential component out of four— generated revenues of Rs.761.3 million in the three months compared to Rs.239.7 million in the same three months in 2020, logging 218 percent increase.
By the end of 2020, the company had sold 68 percent of the units in Phase 3 of the project, which consists of 304 residential units and 26 percent were pre-sold in the Phase 4 of the project, which consists of two apartment towers with 340 luxury apartments.
The construction of Phase 4, which was 97 percent completed by the end of 2020, is slated to be fully completed by the end of this month.
The results are a sign of the resilience and the faster revival in the luxury apartment sector which stood at a relative risk compared to the affordable housing sector which saw their prices soaring by over 20 percent in the year through March 2021, faster than the apartments’ and lands’ prices.
Apart from the unique nature of the project, which makes it a ‘city within a city’, and its promotional efforts, the right mix of fiscal and monetary policies too helped the company as well as the sector to come off quite successfully, similar to the robust revival seen in the affordable housing sector. “The measures taken by the government to remove value added tax on apartment sales and the lowering of interest rates along with political stability have increased demand during the fourth quarter of 2020”, the company said.
Meanwhile, Overseas Realty, which is also the landlord of the iconic World Trade Centre, Colombo generated Rs.535.9 million in rental income in the three months compared to Rs.576.2 million in the year earlier period.
The commercial property component of the Havelock City project, which comprises of an office tower and a shopping complex is now in final stretch of construction and is expected to generate recurring revenues for the group by way of rental incomes by the time the two buildings are fully complete by the end of 2021.
Pre-leasing of both commercial and retail space have commenced, the company said.
In total, the consolidated revenues coming from property sales, rental incomes and other property service generated Rs.1.4 billion in the three months, up 53 percent from Rs.906.8 million in the same period in 2020.
The company reported earnings of 43 cents a share or Rs.455.4 million in the January-March 2021 period compared to 42 cents a share or Rs.535.2 million in the similar period in 2020.