Q: Could you tell us about your evolution as a leading real estate company?

A: In 2010, I founded Capital Trust Properties, initially with only two employees in a small room. This venture marked a diversification from our primary focus as a stockbroking company. Recognising the lack of regulation, professionalism and ethics in the local real estate sector compared to other countries, we aimed to bring positive change.

Our expansion included the establishment of Capital Trust Residencies, the award-winning property development arm of the group.

Today, Capital Trust Properties stands as a leading real estate transaction and advisory firm in the country, proudly partnering with global names such as CBRE, Colliers and Knight Frank.

Minoli Wickramasinghe
Managing Director

Q: In light of the economic crisis and changes in the tax regime, what’s your assessment of the local real estate market?

A: Sri Lanka’s real estate sector underwent a tumultuous period, starting with investor concerns following the Easter attacks and exacerbated by the economic impact of COVID-19. The political and economic crisis brought about high inflation (cost-push inflation) and currency depreciation, prompting us to advise clients on real estate as a hedge.

Property prices surged substantially in Colombo and suburbs, presenting an opportunity – with prices going up from Rs. 60,000 a square foot to about 90,000 rupees a square foot in Colombo 1, 2 and 3; and from Rs. 40,000 to 60,000 rupees in Colombo 4 and 5 for Tier 1 (the luxury apartment sector). Prices in suburbs also jumped from Rs. 25,000 a square foot to about 40,000 rupees a square foot.

However, the retrospective introduction of VAT following IMF recommendations stirred investor dissatisfaction due to perceived unfairness and policy inconsistency. Investors sought opportunities in tax-free countries like the UAE and Australia as interest rates spiked from nine to 29 percent, impacting real estate demand.

The reluctance of banks to lend further contributed to economic contraction.

Q: What are the most significant challenges faced by developers and real estate agents?

A: As a real estate transaction and development firm, our resilience amidst numerous challenges stemmed from our lean structures, fast decision making and innovative thinking during times of currency fluctuations.

From a developer’s perspective, rising exchange rates led to increased raw material costs, exacerbated by a shortage in construction materials as 90 percent of our raw materials were imported.

We wisely refrained from initiating new developments, despite interest from a foreign multinational corporation, recognising potential challenges such as labour shortages, escalating material costs and high finance expenses.

Contractors in the C1 category faced financial woes due to delayed payments for government projects, and dwindling demand amid substantial interest rate hikes, causing a contraction in the sector.

This unfortunate timing coincided with a national downgrade, hindering foreign direct investments and further diminishing the demand for real estate.

The imposition of a nearly 20 percent VAT on apartments, coupled with a four percent stamp duty, poses a threat to demand in a developing nation striving to attract foreign buyers. These taxes are perceived as potentially detrimental and we hope the government reevaluates its impact on the economy, taking necessary corrective measures.

Q: And what challenges do homeowners face?

A: Lack of financing, high taxes and uncertain government policies, including in property taxes and interest rates, contribute to slower demand for properties.

Despite these obstacles, there is an opportune moment to make selective long-term investments in real estate – especially considering its potential as a hedge against exchange rate uncertainties.

Q: Your latest developments and projects are…?

A: We’ve temporarily halted all development due to an unfavourable real estate environment, prioritising the protection of our brand and the interests of our clients. We aim to deliver quality products at the right price and safeguard their investments.

Q: In what way does your organisation add value to customers?

A: Capital Trust Properties collaborates effectively with all stakeholders including government bodies, commercial and residential property owners, buyers, sellers and others. As the leading property transactional company, we stay well-informed about industry dynamics, enabling us to make informed decisions that benefit our stakeholders.

Q: How does Capital Trust Properties capitalise on tech advancements to enhance its offering?

A: We prioritise technology adoption, and are currently undertaking digitalisation across functions to enhance efficiency and accuracy, and provide added value and convenience to all stakeholders in addressing their property needs.

Q: What are your organisation’s plans for 2024 and beyond?

A: Capital Trust Properties has a new entity, Capital Trust Valuations, enhancing our service offering while maintaining complete independence. With comprehensive A-Z services in every aspect of property services, we ensure professionalism in serving our clients.

Additionally, our successful venture in short stays with owned apartments reflects high standards and we’re planning a significant expansion in the property sector in 2024, contingent on favourable conditions in the country.

As a socially responsible company, we have consistently led impactful initiatives in health, education, women empowerment, and diversity and inclusion, through our CSR projects concentrating on health, education, women empowerment, diversity and inclusion.

– Compiled by Allaam Ousman

Telephone: 0777 233533  |  Email: properties@capitaltrust.lk  |  Website: www.capitaltrust.lk