Tough times ahead but long-term outlook for Sri Lanka’s luxury real estate remains optimistic

The global pandemic is placing new pressure on the already challenging real estate market conditions in Sri Lanka, nevertheless the most elite luxury real estate projects have recommenced construction with vigour and reflect strong optimism despite obstacles ahead. In this exclusive interview, Petar Petrovic, Managing Director and Partner; and Vedran Bostandzic, Marketing Director and Partner of Sri Lanka Sotheby’s International Realty share their insights into the luxury real estate market in Sri Lanka and elaborate on why they are watchful but remain bullish about their flagship listing, Sapphire Residences, by Welcomhotels Lanka (Private) Limited ('WLPL'), a wholly-owned subsidiary of ITC Ltd., which is expected to be the jewel in the crown of Sri Lanka’s skyline.

Q: In your opinion, what will be the outcome of the pandemic on the real estate market in Sri Lanka?

Petar Petrovic: It would be naive for me to come forth with a narrative that ‘everything is fine and that it is only a matter of time before things return to normal’. There is no doubt that this crisis is having a profound short- and medium-term impact on markets. Sri Lanka’s real estate market is in the eye of the storm which was gathering force over couple of years even before COVID-19. Unfortunately, not everybody will come out of it unscathed; many businesses will be heavily bruised. The ability to adapt to the new reality will be the key to survival beyond the pandemic.

Q: Yet, you believe in the potential of Sri Lanka as a luxury real estate investment for serious investors. Why?

Petar Petrovic: Notwithstanding the immediate challenges, underlying drivers behind the long-term positive outlook for Sri Lanka remains positive. It is an incredibly beautiful place with enormous potential for growth. Its strategic location and proximity to India, the fast-growing global giant, offers many opportunities in all segments of real estate and its economy as a whole. Some of the largest global conglomerates have invested in Sri Lanka, and despite all drawbacks, have shown undeterred determination to complete projects. These landmark projects are of a scale and magnitude that will act as game-changers in the future development of the country. Very recently, the Sir Lankan government has received assurances from China that the Colombo International Financial Centre or Port City is going ahead as planned.

Q: What is the status update on Sapphire Residences at the moment?

Petar Pertrovic: ITC, the conglomerate behind our anchor project, Sapphire Residences, is determined more than ever to complete the project in all its glory as intended from the start. Even more so, we are adding new elements to the project’s value proposition, so it will offer a lifestyle better suited to the post-COVID-19 new normal. In a crisis such as this, the financial strength of large corporation such as ITC makes it easier to withstand the storm. Recently, the project marketing team has produced a very strong video message which visually encapsulates the dedication and determination of Sapphire Residences team to carry on despite adversity.

Q: What changes do you expect to see as a result of the crisis?

Petar Petrovic: COVID-19 is changing the way real estate is going to be marketed in the future. The growing trend of viewing and sourcing property of interest on the web is rapidly accelerating since the start of the crisis. Few figures from Sotheby's International Realty illustrate the trend: number of visits to SothebysRealty.com has gone up 30%, SIR Youtube channel viewers are up 137%, while searches from social media channels are reaching new heights, with Facebook increasing 163% year-on-year.  

Q: How do you see business activity recovery and demand returning in the industry?

Petar Petrovic: We are monitoring the situation very closely. We are hoping that the peak of the pandemic is behind us. Accordingly, we expect market conditions to start improving from September 2020. With travel restrictions being lifted, we would expect foreign buyers to start returning to the market towards the end of the year. Transaction volumes should significantly improve in 2021. For now, we are expanding our portfolio of exceptional properties. It is important to be out there in front of global audience to show Sri Lanka and its amazing real estate in the best possible light.

Q: How challenging will it be for potential buyers to scour properties amidst the pandemic?

Vedran Bostandzic: I actually believe the process of selection might become more efficient and faster. Before the crisis hit, 50% of the sales process was conducted virtually. Now it would not be an overstatement to say that figure is over 80%. With all travel restrictions in place and people spending extended periods on the internet, finding property information and making a selection of what one likes is almost entirely done on the web. The communication with potential buyers is also conducted virtually. Only the final stage of the sales process involves visiting locations and agreeing to transactions.  For the past few months, Sotheby’s International Realty has gone on overdrive to provide the international network offices with tools and improved communication channels to adapt to new way of doing business. The new look global SothebysRealty.com platform has been recently launched, which sets new standard in experiencing real estate on the web.

On the local level, Sri Lanka Sotheby’s International Realty is working with a professional team of videographers and photographers to streamline the production processes and provide our client base with the best value-for-money marketing material. When it comes to visual representation of properties on our marketing platforms, we do not make compromises. The quality of virtual experience is of upmost importance. In addition, we can provide 360 virtual property tours to sellers that list their properties with us. The virtual walk-through tours provide amazing way of experiencing properties before visiting the location.

Q: What is you final message to our readers?

Vedran Bostandzic:The entry of Sri Lanka Sotheby’s International Realty in the country itself sends out a clear message to investors that the emerald island is a must-have destination in every serious investor’s property portfolio. Marketing the most prized development, Sapphire Residences, and many other stunning properties across various locations in the country, Sri Lanka Sotheby’s International Realty is expecting investor appetite to start returning for Sri Lanka’s real estate within a few months.