Proving Its Mettle

Silver linings have been hard to find for debt-distressed Sri Lanka recently, but the resilience of its property sector provides at least some grounds for optimism

- Al Gerard De La Cruz

There were grim economic tidings on several fronts for Sri Lanka in 2020. In common with nations around the world, the island country was slammed by the pandemic, which all but wiped out its all-important tourism sector.

Only a year after it catalogued Sri Lanka as an upper-middle-income country, meanwhile, the World Bank downgraded it to lower-middle-income status in July 2020. By year’s end, the heavily indebted insular economy contracted by 3.6%, its foreign reserves exhausted by depressed foreign remittances, non-existent tourism, and underperforming exports.

But don’t cry for Sri Lanka just yet. The teardrop-shaped island may yet find consolation in real estate.

Ignoring the closure of the land registry and transaction delays during two lockdowns, the buy-to-live residential real estate market has performed solidly for a nation with a long history of unrest, according to Roshan Madawela, founding director and chief executive officer of the consultancy Research Intelligence Unit (RIU).

“It’s been a tough two years since the bombings,” Madawela says, referring to the devastating Easter Sunday attack in 2019, “but sales continue to happen, and they have been increasing despite Covid-19.”

Tier-three or semi-luxury apartment projects were absorbed by up to 60% last year, compared to 70% the previous year. “I don’t think the word ‘recovery’ is appropriate. The market has proven to be resilient, and ‘resilient’ will become ‘resurgent’ as we move forward.”