Real estate sector booming

TFC targets Rs one billion profitm

Sanjeevi Jayasuriya

The country’s real estate market has a positive impact due to the reduction in interest rates and The Finance Company performance has seen a marked growth last year.

The Finance Company (TFC) has around 3,000 real estates islandwide and it sells 300 blocks per month at present. The real estate market recovered from a stagnant situation soon after the war and the industry is now booming, The Finance Director and Chief Executive Officer Kamal Yatawara said.

“We have the strength to capture the potential in the real estate sector. The company purchases land at market price or slightly below it to record higher performance,” he said. People look at alternative investment solutions to be compensated by the reduction in the interest rates and purchasing land has become an option.

This has created a dynamic market for real estate companies. The company’s real estate segment has grown by 173 percent contributing to the company’s overall revenue significantly. TFC has changed the strategy from looking at long-term investment options to medium and short-term. It has embarked into the pawn business and has opened 30 centres upto now recording a growth of 50 percent during the last quarter.

Plans are underway to increase investment in this sector by 50 percent. The vehicle business has showed remarkable performance as it has recorded 3,000 transactions during the past six months. The NPL ratio of the company is 0.1 percent and TFC has one of the best recovery teams in the financial sector. “We are looking at businesses to match the funding period. As the company has regained the confidence of depositors it is looking forward to capitalize on this situation to become a profitable venture.

It targets to reach Rs one billion profits within the next three years,” Yatawara said. The company recorded an intake of Rs 98.9 million in new deposits at the first working day. The third quarter of 2010 recorded a 47 percent growth in new deposits increasing monthly new deposits to Rs 300 million. Over 85 percent of its depositors are consenting to their deposits being renewed at maturity.

TFC’s share issue will be opened to raise Rs 1.6 billion in capital. The share issue is initiated to infuse fresh capital and to make a positive impact on the industries it engaged in including the real estate sector.