Condominium developers welcomes Budget 2017
Nov 23, 2016 – The Condominium Developers Association of Sri Lanka, an affiliated trade body of the Ceylon Chamber of Commerce, which represents the condominium developers in the country hailed the Budget Proposals presented to Parliament by Minister of Finance Ravi Karunanayake.
The Budget contained a number of progressive proposals to stimulate demand from a new market segment to help absorb the increasing supply pipeline.
Current practice: Foreigners are not allowed to purchase condominium property situated below the fourth floor.
Proposal: Foreigners are allowed to purchase condominium property in the first four floors as well.
Current practice: Condominium property could be purchased by foreigners only if the entire value is paid upfront through an inward foreign remittance.
Proposal: Foreigners are allowed to raise 40% of the cost from a domestic bank. The debt servicing must be from foreign currency.
An association spokesman stated that currently there are over 8,000 luxury apartments being constructed in the city of Colombo. It is important to attract foreigners/Sri Lankan diaspora to purchase apartments to absorb this supply. An oversupply situation can be catastrophic to the property sector in particular and the economy in general.
In the Budget speech the Finance Minister identified the significant potential for Real Estate Investment Trusts (REIT), and agreed to facilitate the SEC in introducing amendments to the Unit Trust code.
Further, the land Alienation Law was relaxed by removing the restrictions on foreign controlled listed entities and now quoted public companies with foreign ownership exceeding 50% could purchase property and land in Sri Lanka.
“This supports the country’s development plans including the government’s Megapolis development initiative. It is essential to attract FDI into the property development sector via freehold land ownership. Furthermore, public quoted companies whose shares are freely transferable with no control over the extent of foreign ownership, now could acquire property,” stated the association representative.
Earlier, in October 2016 the VAT Amendment Act exempted the supply of condominiums from Value Added Tax, thereby making apartments more affordable and creating an even playing field among different categories of condominium developments and developers who were earlier subjected to different VAT regimes.