Growth and potential correlate with changing social and economic dynamics: S. Thumilan

As Sri Lanka sails forth towards unprecedented development, the real estate and construction sector has become significant as the backbone of the country’s economy. As the sector continues to showcase phenomenal growth, speculations concerning an unstable future have been voiced by some. 

Sri Lanka’s real estate industry is driven forward by a set of expert players that place emphasis on innovation, strategy and sustainable growth. A quick look at the recent stats will prove this as the real-estate and construction sector have regained momentum with a substantial growth of 14.9% in 2016 from 2.7% reduction in 2015. Hence it’s important to delve deep and look at the fundamentals that are driving Sri Lanka’s real estate market before arriving at conclusions.  

Having lived through Sri Lanka’s real estate boom right from the beginning, through the war years and the post-war boom, S. Thumilan, the Chairman of the Blue Ocean Group, shared some of his valuable insights on the fundamentally sound nature of the real estate boom in the country.

“As a market leader, we are quite aware of the behavioural aspects of the market. In a recent speech, Prime Minister Ranil Wickremesinghe mentioned the scarcity of land in Colombo for real estate development. This statement alone is quite self-explanatory. There is a lack of supply and demand has far outpaced supply. The market is catering to distinct segments based on the location and living ambiance. It’s safe to say that there is a supply shortage in all of these categories. However, it’s important to note that the real estate companies also need to ensure their core competencies to thrive in this environment.”

Thumilan points out that the supply in the luxury market segment needs to be viewed within the context of important factors such as the consistent flow of FDIs into the country, thanks to on-going socio economic stability and economic growth. While the government is focussed on developing the Western Province into a Megapolis by 2030, many expatriates who moved out during the war years are now slowly moving back to live out their retirement in their own country. 

‘We can clearly see that the purchase of condominiums in Sri Lanka by high net-worth expats has seen an exponential growth. It is a growing trend for citizens in countries such as China and the oil-rich Middle East and North Africa (MENA) to immigrate to other countries for a healthier and more convenient lifestyle. Therefore, a vast number of expats are looking to buy apartments for investment, holiday homes and accommodation purposes. Apartment pricing in Sri Lanka continues to be attractive in comparison to property prices in Europe, Hong Kong or China. Also, we cannot forget the vast potential Sri Lanka has to grow as a regional medical and educational hub.”

According to Thumilan, the ratio of condominium units to the population is well below the global average as Sri Lanka’s urbanisation rate is grossly lower than the global average and even than those of its peers. As published by World Bank in 2016, Sri Lanka’s urbanisation rate stood at 18% against the global urbanisation rate of 50%; a fact that indicates tremendous room for growth. 

‘’This is attested by the fact that we at Blue Ocean have, in the last three months alone, closed deals worth in excess of Rs. 8 billion and expect many more deals to be closed within the next six months. We’re a 100% Sri Lankan-owned company and the land on which our developments are built are all purchased by us outright, prior to commencement of the development, thus allowing us to ensure the highest quality of our end product.”

With over four decades of experience under its belt, Blue Ocean Group has been shouldering a bulk of construction work in the country and across many fields from condominium and commercial projects to government funded development projects. Blue Ocean’s vision to achieve excellence in all its endeavours is carried out by the Group’s construction arm, Link Engineering, backed by the other companies of the group – Link Ready-mix, Link Aluminum, Contessa, and Link Heavy Machineries. 

The Blue Ocean Group claims that the root of its success is in its ability to provide professional client-oriented services on time. The Group is planning its maiden overseas expansion in the South Asian region and hopes to have an active overseas operation during the forthcoming financial year.