Q: In your opinion, how is the overall development of infrastructure impacting the real estate sector?
A: Transportation infrastructure likely has the biggest impact on the evolution of the real estate sector. Proximity in relation to travel time rather than distance to hubs of activity drives value and rentability.

In Colombo, most jobs, schools, social infrastructure and entertainment are concentrated in proximity to the heart of the city. For example, areas like Ja-Ela should see increased development activity as travel time from the north will be drastically reduced with the completion of the Port Access Elevated Highway Project.

Conversely, corridors in the south and east of the city will likely see tempered growth in the light of the slowdown in modern rail infrastructure investment, which would dramatically reduce travel time.

Given that the city’s expansion is constrained by efficient transport infrastructure, I believe its centre will continue to grow rapidly. 

Q: What is your assessment of the quality of labour in the construction industry?
A: High quality skilled labour availability is a problem for the construction industry in Sri Lanka. This is why it has no choice but to employ specialist workers from overseas for larger and complex projects.

The COVID-19 pandemic has made this problem more acute because a large segment of the available Sri Lankan workforce was homebound while there were tight restrictions on bringing in foreign labour at the time.

There needs to be a much more concerted effort in skills development in the local construction industry for the longer term. Evidently, there is demand for these skills.

Q: Is there adequate demand to justify the boom in construction especially in the luxury segment?
A: Despite various challenges over the last couple of years, the real estate market has done well with demand being robust. This is because real estate is a stable long-term class of assets, and an excellent hedge against inflation and volatility.

However, we’ve seen a substantial decline in demand from the Sri Lankan diaspora and expats but that too should see a return to healthy levels as we emerge from the pandemic.

There haven’t really been any new launches of significant luxury projects in the last two years and I am certain the existing supply of inventory will be mopped up. A resurgence in tourism and greater international visibility of the Port City (a.k.a. Colombo International Financial City or CIFC) will also help the broader luxury market.

Q: Could you shed light on the latest trends in the construction space?
A: A trend that is crystal clear is that more and more Sri Lankans are adapting and transitioning into urban apartment style housing.

As a city, we still account for less than 10 percent apartment housing – far less than our regional peers but this is certainly changing. You can see apartment buildings emerging across Colombo and its suburbs, and the uptake has been strong.

In terms of looming challenges however, we should be wary of new building and construction regulations, and their potential impacts on an already constrained cost structure in the real estate sector, which in turn will impact housing affordability.

Our construction costs are already higher than in Malaysia and the regulatory processes are cumbersome.

Q: How would you describe the competition – and what strategies does John Keells Properties employ to stay ahead?
A: I believe competition in the real estate sector is very robust now, which is healthy. Competition gives customers a wide choice and will drive innovation.

John Keells Properties is the oldest and largest developer in the country, and our track record of delivering multiple projects in the market – both completed and occupied – speaks for itself.

We have always kept ourselves at the forefront of the innovation curve – be it with iconic large projects like Cinnamon Life and Tri-Zen, or intimate holiday homes at the Victoria Golf & Country Resort, which are presently in the market. We often define what is best in class, and have the experience, discipline and financial strength to deliver.

Q: What challenges are companies in the construction industry facing given the present landscape?
A: The primary challenge centres on costs. High para tariffs on materials and protectionism in the construction space have been issues for a while.

In addition, we are currently facing a slew of challenges related to imports and logistics because our industry is highly import dependent.

Emerging new regulations also raise cause for concern for the real estate sector as they limit competition and innovation.

Q: And what are John Keells Properties’ future plans in terms of expansion, new products and services, and so on?
A: John Keells Properties currently has three projects in the market – viz. the Cinnamon Life Integrated Resort, Tri-Zen residential development and a limited offering of holiday homes at Victoria Golf & Country Resort.

We remain very bullish about the future of the property sector in Sri Lanka over the medium to long term and have several projects in the planning phase at the moment.

In our view, Colombo is on the cusp of a major transformation in its housing market and we’ll continue to invest in this space over the medium term.

 

INTERVIEWEE DETAILS
Nayana Mawilmada
Sector Head
CONTACT DETAILS
Telephone:2152152
Email:info@jkproperties.lk
Website:www.johnkeellsproperties.com