By:Staff WriterColombo (LNW): Sri Lanka’s condominium developers have halted new projects and building materials are skyrocketing with the collapsing rupee and import protection given to building material producers triggering a crisis in partially built apartments.
“At present no Developers are embarking on new projects as budgeting even in the short term is impossible,” the Condominium Association of Sri Lanka said in a statement.
The stark reality though is that Developers with partially constructed properties and current Buyers [and] those who have paid deposits on “old pricing” will jointly face difficulty, it added.
“On the one hand, exponentially increased costs preclude the adherence to previously quoted prices and on the other hand buyers facing unanticipated cost increases and hiked-up interest rates.”
According to the information collected through the Condominium Market Survey conducted by the Central Bank of Sri Lanka, sale of new condominiums by developers has stagnated at subdued levels by the end of Q4, 2022.
The Condominium Property Volume Index2 which measures the trend in number of new condominium sales, recorded a Year-on-Year reduction of 78 percent and a reduction of 10 per cent compared to Q3, 2022.
Imposition of VAT and other levies on condominium sales as well as the overall unfavourable economic situation may have resulted in this subdued performance in sales volume.
The overall price level of new condominiums in the Colombo district has stagnated at high levels by the end of Q4, 2022 as depicted by the Price Index for New Condominiums in Colombo district, which measures the trend in price levels of new condominiums sold by condominium developers.
The index recorded a Year-on-Year growth of 23.5 per cent while recording a marginal decrease of 2 per cent compared to the previous quarter.The relative reduction in sales of high-end condominiums may have contributed to the moderation in the Price Index for New Condominiums.
In terms of price categories, transactions in the categories of less than Rs. 25 Mn and between Rs.25 Mn—Rs. 50 Mn have increased compared to the previous quarter to 35 per cent and 43 per cent respectively while the transactions in higher price categories have decreased.
Further, single condominium projects category in the Colombo district remains to be the most prominent category during Q4, 2022 while the number of sales in the mixed development projects in Colombo district has shown a significant increase.
The three key funding sources for condominium developments were Pre-sale deposits, bank loans and equity. The proportion of pre-sale deposits has increased over the past year while the proportion of equity has decreased.
The majority of condominium buyers were Sri Lankan residents while the dual citizen and foreign purchasers remained minimal. Purchase of condominiums for immediate living has shown a significant increase over the last year while purchases for investment has decreased over the last one year.