Condominium developers call for resumption of activities with relief attached

• Writes to president and says prolonged suspension of construction activities taking severe toll on sector
• Requests govt. to include property developers as part of relief package announced by CB

The country’s condominium developers have requested permission to return to work and resume their construction projects, which are stalled due to the lockdowns, as soon as practically possible and expect relief from the government.

In a letter to the president, the Condominium Developers Association of Sri Lanka said the prolonged suspension of construction activities is taking a severe toll on the sector and its employees running into many thousands. 
The association said the only way to lessen the crisis is to resume the activities. 

The association said the resumption of work in the construction sites could be done based on clear regulations and restrictions as advised by the health authorities. 

“The property development industry is the primary employer and revenue source for the majority of professional construction firms, as well as thousands of SMEs across the economy, from small-scale building material providers, to manufacturers and installers of a range of finished goods and equipment. 

A slowdown in the development activity will have immediate impacts on these firms (and their employees), which will only get resolved when the development projects are able to move forward,” the letter said. 

The construction sector was among the first major industries to feel the pinch from the coronavirus with its inability to source materials and equipment needed when the virus was fast spreading in China. 

The association also sought clarification on the government’s import ban on non-essential items since early April, as the sector is seeking permission to bring down 
project-related materials. 

The Export Development Board (EDB) last week said it has got the authority to import items used in export manufacturing. 

The association also sought the suspension of certain para-tariffs such as PAL, CESS and other levies on project-related material imports for a stipulated time, to reduce the cost structure and cash flow pressure at a time when revenue flows have constrained. 

Further, the association requested the government to include the property developers as part of the relief package announced by the Central Bank on loan moratoriums and concessionary rate working capital loans. 

The package was mainly aimed at providing relief to micro, small and medium-sized enterprises and self-employed and employed persons. 

“With very large capital outlays for our projects, the developers are among the first to go into financial distress with an economic downturn. The cascading effect of suspension of development projects will ripple through the economy at multiple levels as banks, personal investments of homebuyers and hundreds of thousands of jobs will be at risk,” the letter read. The association also urged the government to expedite the implementation of real estate investment trusts (REITs) and related legislations to facilitate the equity needed for the new projects, which will stimulate long-term investments in real estate and help stabilise the property prices. 

REITs will reduce the banks’ exposure for price fluctuations in lands and property. 

Meanwhile, the association also sought extensions to the project periods for the Board of Investment (BOI) projects enjoying certain concessions, due to the delays caused by the lockdowns and supply chain issues. 

Further concessions were sought to attract new investments into the sector, considering the tough environment for attracting foreign direct investments. 

At the same time, the association also requested, albeit controversial, the government to encourage foreign buying of Sri Lankan real estate. “Allowing foreigners currently based in Sri Lanka to purchase apartments with their domestic earnings (without having to remit from overseas), allowing expats to finance a portion of their purchase price through domestic banks in LKR, provided the major part is remitted from overseas and liberalising regulations for long-term resident visas, are among some of the interventions that would help in this regard,” the letter said.