- Sales increase in both mixed development and single condominium projects in Colombo district
- High buyer preference for units priced below Rs.25mn
Backed by the low interest rates regime and increased mobility following virus-related lockdowns, Sri Lanka’s condominium sector made a marked recovery in the third of quarter of last year (3Q20) with the sale of condominium units reaching highest levels seen since first quarter of 2018, according to Central Bank’s (CB) latest Condominium Property Volume Index (CPVI) released this month.
“Sales have increased in both mixed development and single condominium projects in Colombo district and indicated a high preference among the buyers for units priced below Rs.25 million, in single condominium project category,” the CB said.
Compared to various price categories, 77 percent of units sold were priced below Rs.25 million, compared to 57 percent one year ago while 73 percent of units were single condominium projects based in Colombo district.
In addition, the share of single condominium units sold in Gampaha and Kalutara rose to 16 percent in the quarter from 7 percent one year ago.
At the end of 3Q20, condominium sales transactions reached over-2-year high moving well beyond 150 index points in CPVI.
Sri Lanka’s condominium sales transactions started declining from 2Q18 after peaking 300 points in CPVI, which was mainly due to political uncertainty, which evolved to a full-blown constitutional crisis towards the end of 2018.
It was further exacerbated by the Easter Sunday attacks that took place in April, 2019, which led to record low sales in 2Q19. However, condominium sales made a gradual recovery up until end of 2019 before COVID-19.
According to CB data, 92 percent of the units in completed single condominium projects were sold while 55 percent of the units in both single and mixed development projects in ongoing projects were also reserved at the end of 3Q20.
Majority of the condominium buyers were resident Sri Lankans with most of them having purchased condominium units for the purpose of immediate living. Nearly 80 percent of these buyers relied on own funds as the prime source of funding in the period.
Meanwhile, the CB noted that condominium developers financed 40 percent of their funding requirement on average through pre-sale deposits while 31 percent was fulfilled via bank loans and only 29 percent was funded with developers’ equity.
Meanwhile, the advertised apartment sales prices recorded a contraction in 3Q20.
“A possible reluctance to invest in long-term ventures may arise from the uncertainty created by the COVID-19 pandemic. Such reluctance may have resulted in creating a lower demand for real estate investments which in turn led the prices to decline,” CB reasoned.
However, advertised property prices have indicated an overall increase in the quarter, which perhaps attributable to the regaining of investor confidence. (NF)