Lankan South coast next Asian boom market!

By Roshenka de Mel

Describing Sri Lanka as Asia’s next ‘big success story’, Bill Barnett, Managing Director of C9 Hotelworks, a leading global property consulting firm, said that the country’s Southern coast is fast attracting waves of foreign investment and Tangalle in particular is a prime real-estate location poised to see significant resort and property developments.

Barnett has 26 years of experience in asset management and hospitality consultancy in the Asian Pacific region and is a leading specialist on hotel and property development issues. He is currently conducting market research on Sri Lanka’s real estate opportunities and comparative trends in the South Asian real-estate markets.

Key trends noted by Barnett are that there are an increased number of hotel chains working in collaboration with developers on mixed use projects in order to minimize debt and generate greater returns. He stated ‘Tourism and real estate are somehow much more prevalent after the financial crisis. Hotel developers are able to shed risk when they develop through branded residential projects. If you develop and build a hotel for USD 100 million, it is a long-term investment, if you build a hotel and sell some real-estate at the same time, then you receive faster returns on your investment.’ Barnett explained that resort properties especially those along the Southern coast are bound to see rapid developments in product and pricing due to the critical mass of international brands and hospitality led residential projects. Barnett touched on the international brands Sixth Senses and Shangri- La as key examples of how Sri Lanka is now attracting large international hotel chains, a trend which is bound to develop rapidly. Using the example of Nisala, a six-villa estate with a property priced at USD 2.45 million, Barnet explained how Sri Lanka is now poised to attract a new level of multi million dollar real-estate investments. Whilst Galle was previously considered a real-estate investment hub, a beach drive is seeing demand for real-estate move southward from Talpe’s Golden mile, down to Tangalle, Weligame and Mirissa Bay, where there has been a noticeable rise in real-estate purchases and property development for an entirely new class of hotels.

Aside from international hospitality brands spearheading the drive for real-estate investments in Sri Lanka, Barnett explained that the drive for ‘holiday homes’ and ‘dream homes’ amongst retired individuals and those looking to purchase a second home will also contribute greatly to real estate demand. Barnett stated that China, India, Eastern Europe are the most prolific markets with the greatest spending power and the emerging Asian nations will drive investments in real estate and the tourism industry.

Barnett highlighted the importance of infrastructure in assisting real-estate development and stressed that the government alone should not be held responsible for fuelling the drive for development and growth, the hotel sector and international hotel brands need to play their part and generate developments and healthy competition. Barnett stated ‘Increased airlifts will make a very positive impact for real-estate developers. They say you can’t stay there if you can’t get there, the airport in Hambantota will create a crucial access point and will uplift airlift capacity when it opens in 2012.’ Barnett also explained that the toll road to the south will also create the point of access that many locations need in order to be valued as prime real estate.

In regard to North and East real-estate developments, Barnett stated that at present the Northern regions are too disconnected from infrastructure and seasonal climate patterns favour the south. However, once adequate infrastructure is in place in the North, it will provide the ideal location for more long-term real-estate development plans.

Touching on some of Sri Lanka’s tourism strengths that should be further marketed, Barnett highlighted that wellness, surfing and medical tourism all can be further developed. Barnett explained that tourism is a key catalyst in resort development and stated that the essence of Sri Lanka as a brand needs to be delivered with confidence. Barnett concluded by stating ‘Sri Lanka is definitely going to be a great success story and there is great scope for the country’s real estate market. The Southern gold coast is set to sustain cyclical growth and take a developing real-estate market to its maturity stages. Also, other nations in the region make it impossible for foreigners to own and lend land, Sri Lanka is potentially the only country in the region that is willing to make land available to foreigners and this is going to attract many international property investors and more upscale real-estate developments.’