Condo sales rose in Q1 2021, units below Rs.25mn most sold

Low interest rates were a ‘shot in the arm’ for the industry

by Sanath Nanayakkare

A recent report published by the Statistics Department of the Central Bank of Sri Lanka shows Sri Lanka’s Condominium Market recorded a significant increase in sales transactions in Q1, 2021 compared to the previous quarter.

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 Condominium Property Volume Index shows.

The most preferred condominium units remain to be in the single condominium project category and below Rs.25 million.

With respect to the sales status in completed condominium projects as at the end of Q1,2021, 92 per cent of the units have been sold. Meanwhile, in the ongoing condominium projects, 50 per cent and 58 per cent of units have been reserved so far in single condominium projects and mixed development projects, respectively.

Funding requirements of developers have been predominantly met through pre-sale deposits, bank loans and equity in similar proportions, by the end of Q1, 2021.

The majority of condominium buyers are Sri Lankan residents, and the residence status of buyers remains largely unchanged from historic

data. In terms of the purpose of purchasing, the majority of purchases remain to be for immediate living, while a noteworthy increase could be observed in condominium purchases for investments in Q1, 2021.

The survey has also calculated the averages to get an overall understanding about the funding structure of condominium developments using the percentages of funds received through different funding sources provided by each developer.

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.

Statistics Department of the Central Bank of Sri Lanka launched the Condominium Market Survey during the 3rd quarter of 2017 with a view to obtaining market information, considering the importance of this sector to the real estate industry and thereby to the overall economy. The survey is carried out on a quarterly basis and the respondents consist of the members of the Condominium Developers Association of Sri Lanka and other key market players.

Meanwhile, Roshan Madawala, Founder of Research Intelligence Unit (RIU) speaking at a Property Guru webinar said last week that developers of residential condos say that their business is good and steady. He went on to say that the reason for this is the government’s bold decision to slash interest rates which has provided a ‘shot in the arm’ for residential developers.