Boom time in the housing development business

Lynn Ockersz

There is vast, untapped business potential in property development in Sri Lanka, primarily on account of a rising demand for aesthetically- pleasing, well laid out, environmentally-friendly residential houses, away from the hustle and bustle of city life.

To exploit this potential to the fullest, the State should encourage foreign and local collaboration in property development says Hafeez Rajudin, Director - CEO, Swarna Mahal Property Developers, in this interview.

Q: What are your main lines of business?

A: Our core business is finance, although we started off in the jewellery trade around 35 years ago. Since 2005 we have got into housing and property development, which business arm I head, that is Swarna Mahal Property Developers. From there we went into technology and hotels. We are also in the media industry. We have a TV and radio network.

Q: You referred to the hotel industry. What are the hotels owned by you?

A: We own Hotel Sapphire, Hotel Concorde and we run a fine dining restaurant. We cater mainly to the 'expat market', so the ups and downs in the tourist traffic generally do not affect us. Sri Lankans who come from abroad mainly comprise the 'expat market'.

Q: What took you into property development?

A: Well, we are adjusting to changes in the market. We cater mainly to the upper middle class. We go to the uppermost market - those who usually go in for luxury homes.

Our Convoy Residencies, for example, consist of luxury houses. It is doing very well.

There is currently a big demand for such houses and prior to going in for the project we did a lot of market research.

We saw that there is a substantial, growing demand for such residences. We noticed that when we planned such sites, the plots of land were sold, even before the houses came up.

Even with regard to Convoy we have sold more than 70 percent of the properties. The project is located in Battaramulla and the buyers range from the upper middle class to the 'up class.' Our property development business is picking up very fast, although our main lines of business have been jewellery and finance.

Q: There is a general criticism that property developers use-up land which could be put to developmental uses. What's your reaction to this objection?

A: We concentrate only on locations which are suitable for residences. We don't encroach into commercial environments to do houses. Our houses are built on land purchased from private individuals.

Q: Do you get the impression that most middle class property buyers are preferring to settle down outside Colombo at present?

A: Most of our middle class clients prefer to settle down in the suburbs of Colombo where there is much greenery.

They prefer to be in a more environment-friendly atmosphere. We opt for natural surroundings and so do our clientele.

People are moving away from Colombo mainly due to environmental and aesthetic reasons.

Our homes are built with these considerations in mind.

Q: Do you enjoy any special tax concessions?

A: We are in the process of obtaining BoI status. Meanwhile we are going into condominium development. We have selected a site in Kandy for this purpose in the Dharmaraja hills. The condominium would have all the necessary modern facilities.

Q: What would you like to tell the State in relation to property development?

A: What we need from the State is encouragement. We need to be enabled, for instance, to join hands with foreign investors and develop our businesses.

There is a lot of potential in such collaboration if the State encourages it.

There are plenty of investors who like to come over here and invest, provided they get the necessary concessions. Because they see that they have a lucrative market in Sri Lanka, where property development is concerned, provided they are provided the necessary infrastructure and other facilities.

National leaders need to make a firm commitment to take the country along the development path. Such determination has been lacking so far.

Besides, the country's infrastructure needs to be developed before development projects and programmes are launched.

For instance, it is futile to only set up factories under an FTZ programme and do nothing to develop infrastructure such as establishing a sound road network.

After all, goods produced need to be transported to urban centres, airports and sea ports.

Likewise, with paddy production. It is futile to produce paddy and not have paddy storage facilities which would enable the marketing of such produce.

It is also futile to speak of development aims and plans without telling us how they are going to be implemented.

It is crucial that the implementation measures are clearly outlined or the plan will remain a dead letter. It is vitally important that Government as well as opposition politicians sit together and frame national policies for all sectors - education, agriculture, health, industry etc.

Such policies should not be changed at the whims and fancies politicians.

However, it is crucial that the public is told how these policies would be implemented.

Concrete implementation strategies need to be outlined.