Condominium market rebounds in 3Q from pandemic-induced slump in 2Q

• Buyers opt for higher-priced apartments while most purchases done using own funds 

The strength of the condominium market, measured by way of the quarterly sales of apartment units, recovered in the three months to September 2021 from a pandemic-induced slump seen in the previous three months as well as from the same period in 2020, reflecting some resilience in the sector amid adversity. 

According to the quarterly survey carried out by the Central Bank, the Condominium Property Volume Index regained to a range between 150 to 200 index points in the third quarter of 2021, from between the 100 to 150 index point range recorded in the second quarter this year. 

The recovery in the condominium sales is a sign that the sector, which has had bubble fears, is holding up against the economic downturn caused by the pandemic. The demand for housing and vertical living in particular is keeping the sector healthy.  In fact, real estate activities, which include dwelling, have consistently grown in the broader economy, after some setback seen at the onset of the pandemic, last year. 

Mirror Business recently showed that the real estate activities had grown by 1.6 percent in the third quarter over the same period, last year. 

According to the survey results, the most preferred condominium units were found in the single condominium project category and those units were priced below Rs.25 million. This category accounted for 54 percent of all condominium units sold during the quarter but the share has been sliding from 62 percent in the preceding quarter and 77 percent in the year earlier. 

This is because there has been a gradual increase in the preference towards apartment units priced between Rs.25 to 50 million, of which the share of sales grew to 32 percent in the most recent quarter, from 24 percent in the June quarter and 14 percent in the year earlier period. 

In fact, this phenomenon of home buyers stepping up into higher-priced category of apartments is taking place when the country’s broader economy is in bad shape amid commodities shortages and soaring prices created by the supply chain bottlenecks and the foreign exchange crunch

This is because there has been a gradual increase in the preference towards apartment units priced between Rs.25 to 50 million, of which the share of sales grew to 32 percent in the most recent quarter, from 24 percent in the June quarter and 14 percent in the year earlier period.  In fact, this phenomenon of home buyers stepping up into higher-priced category of apartments is taking place when the country’s broader economy is in bad shape amid commodities shortages and soaring prices created by the supply chain bottlenecks and the foreign exchange crunch.  Meanwhile, the shares of sales of apartment units at their highest end of the pyramid, which are priced at between Rs.50 to 75 million and above Rs.75 million categories remained largely unchanged at 8 and 5 percent levels, respectively, between the two periods.   The survey has found that the prime source of funds for purchasing apartments are buyers’ own funds, with only an average of 28 percent buyers obtaining loans during the quarter.   

“The majority of condominium buyers were Sri Lankan residents and only a few condominiums were purchased by dual citizens and foreigners,” the survey found. “Majority of condominium purchases during 3Q, 2021 were for immediate or future living. Meanwhile, the condominium purchases for investment and rent purposes were increased at this low interest rate environment,” it added.