17th September 2014.
Sri Lanka’s real estate market is opening up and with an improving economy, more expats are looking to buy property either for holiday homes or for when they return, says the boss of its Lamudi property website
Property demand in Sri Lanka is being swelled by growing numbers of expats who are coming home following the past civil war, says the chief of a recently-launched property website.
The country is undergoing great change and further opening up and the property market is benefiting, says Wilhelm Hammes, Managing Director of theLamudi Sri Lankan property website.
Sri Lanka has a population of 20 million, but there are an estimated one million expats and many Sri Lankans who have moved abroad are looking to come back home, Herr Hammes tells OPP Connect.
“To be honest, Sri Lanka is about to change a lot. Because of the effect of the long civil war that actually lasted for three decades, large numbers of Sri Lankans had to leave the county.
“Right now, it is estimated that about one million people left because of the war and because the war is over, the country is really opening up, so there is investment flowing in. People, especially expat Sri Lankans, are looking to move back to Sri Lanka and that is why there are growth opportunities. Also, the general economy is booming, not only the real estate market.”
Growth in the Sri Lankan real estate market could reach around 8% this year, experts estimate and Herr Hammes says this might grow exponentially, boosted by growth in tourism and infrastructure, which is fast improving.
“Sri Lanka had the civil war and the tsunami and there has been a backlash, so now they are recovering from that very fast, says Herr Hammes. Optimism is growing and many property professionals believe that investment in the real estate market is growing.
“We did a survey about the real estate market where we asked 100 professional agents the answer to when is the best time to invest in the country and a lot of people answered ‘right now’ or in ‘two years’, so they can see that it is the right time to go into Sri Lanka – so everything is changing at the moment.”
Another area where changes are afoot is the restrictions on foreigners buying real estate in Sri Lanka. Buying land is complicated and investors have to form a company and can only buy rights for up to 99 years and apartments above the fourth floor, says Herr Hammes.
“However, the government is changing things. On some parts it is encouraging and on some parts there are restrictions. But I can hear it all the time that there is lobbying being done and things are changing. It is slowing opening up for real estate.”
Lamudi was founded in October 2013 by Rocket Internet and is currently available in 28 countries across Asia, Africa, the Middle East and Latin America. In July 2014 it recorded half a million online property listings.
Many clients are local agents and developers, who also want to reach the international market. “Most of our clients are agents, they have the most listings, but there are a lot of developers. Everywhere you look up you can see buildings being built. They are rising everywhere.
“We are present in 28 countries and we want to provide them with high quality international leads which they can also to sell abroad.”
South Asia, South America, South Africa are popular targets, along with the UK, Australia and India. “In India, a lot of property developers are Chinese. Then there is the UK, Canada, US, followed by Austria, Germany France and Italy.
High numbers of Sri Lankans expats live in Australia, UK, Germany and France. “However, what I have heard is that the people who went to Australia are more settled and are not looking so much as other areas to come back to Sri Lanka. Maybe because Australia is such a beautiful place.”
With the rise in tourism, many developers have been targeting luxury holiday home projects.
“New projects are coming up and a lot are in luxury segment. Real estate took a dip in 2007/8, but prices are growing tremendously again and one of the reasons is that Sri Lankans are returning home.”
In April 2014, Herr Hammes went to Sri Lanka to find and open Lamudi’s new office in Galle Road, Colombo, appoint staff and launch the new website, which features property for sale and rent.
“Being in Colombo makes sense because real estate prices, if you compare them to the other cities, Colombo is four times as high as the rest of the country. There is a huge difference, so it makes sense to be based there.”
Because of the size of the city, the people are generally more educated, speak better English, there is a lot more happening. Since we are only focusing on this on our website, those are the ones we are targeting.
Lamudi, which has its head office in Germany, says it is looking to expand. “There are more countries to come and we are always looking for promising markets,” says Herr Hammes.
In Sri Lanka, around 60% of local property buyers still use newspapers as their primary medium, but online listings offer so much more, Herr Hammes argues.
“It is always about efficiency. Buyers are seeing a newspaper ad and contact an agent and see if they can meet. We have descriptions, pictures, you can compare the price, access it from home, via phone or tablet and we provide additional services – that is what we are trying to make people aware of.
“We want to teach the agent and developer, we reach more people than newspaper – international market and higher quality of leads. Someone who is already informed and then contacts the agent has general higher interest in buying or renting a property and conversion rate is higher on our website.”
Lamudi has dedicated account managers who sit with the agent and analyse their listings, acting as online marketing consultants. “We are educating, converting and helping them.”
Herr Hammes says he is proud of his team in Colombo, which has ambitions to be the market leader within six months.
“In Sri Lanka it is just a matter of time until internet penetration reaches something like 60-70%. In Germany I don’t know anyone who is buying a newspaper to buy properties.”
By Adrian Bishop, Editor, OPP Connect
Twitter: @oppnews
From: opp connect magazine. http://www.opp-connect.com/17/09/2014/returning-sri-lanka-expats-boosting-housing-market/
