Local high-rise apartment sales off to flying start ...

■ „Survey shows condominium property volume index recording significant jump from both fourth quarter of last year and year ago period ■ „The climb backed by Sri Lankan residents taking to vertical living in urban and suburban settings

■ „Noteworthy increase observed in purchases for investments in first quarter

Sri Lanka’s condominium sector saw a massive jump in sales during the first three months of the year in a sign of fast recovery in the market for residential apartments as the historically low interest rates sparked a significant desire for affordable housing units while there was a new found interest seen for purchases made for investment purpose.

According to the condominium market survey conducted quarterly by the Central Bank, the condominium property volume index which looks at the number of sales transactions, recorded a significant jump from both the fourth quarter of last year as well as a year ago period reaching an index value of around 250 index points.

In fact the index value reached the highest since the previous highest touched in first quarter in 2018 when the index reached nearly 300 index points, reflecting that the high rise residential apartments had attracted a new found interest, specially from the Sri Lankan residents as they fast take to vertical living in the urban and suburban settings.

“Prevailing low interest environment as well as the increased supply of comparatively affordable condominium projects beyond the city limits of Colombo have led to the increased number of transactions during the period”, the Central Bank said releasing the survey data.

The Central Bank in December 2020 capped housing loan interest rates to 7.0 percent for five years making good on the promise to increase home ownership in the country and also to provide a fresh impetus to the housing and the broader construction sector in the economy after six years of slowdown in activity.

The buyers have mostly preferred apartment units below Rs.25 million, often considered as affordable and the most interest has also been drawn into what is called as the single condominium projects compared to the residential units under mixed development projects.

In reflection of how robust the sales had been during the first three months of the year, completed condominium projects sold 92 percent of their units while the ongoing projects sold 50 percent and 58 percent of their units respectively under single condominium projects and mixed development projects categories.

The developers had predominantly funded their projects through pre-sale deposits from the buyers and bank loans which forms 33 percent each under their funding mix, together making up for two thirds of their project funding.

Equity by the developer accounted for another 33 percent.

Meanwhile the composition of buyers’ mix showed that Sri Lankan residents continued to be the leading segment which trigger most apartment deals, them accounting for nearly 90 percent of sales during the first quarter. The dual citizens and the foreigners accounted for the balance.

While the majority of the housing units were bought for immediate living, there was a, “noteworthy increase”, observed in purchases for investments in the first quarter. There was also an uptick in deals which meant for future living.

“Even though the prime source of funding used for purchasing condominium properties has been own funds, the percentage of buyers who have purchased condominiums through bank loans has increased during Q1, 2021”, the Central Bank said reflecting how the lowest interest rates have fast tracked the recovery in the condominium market.