Increasing investments has been cited as a critical solution to Sri Lanka’s economic crisis. In a recent LMDtv interview, Executive Director of Capital TRUST Holdings Minoli Wickramasinghe spoke about how Sri Lanka’s “strategic location – being a part of the One Belt One Road initiative, and hence of strategic importance to superpowers like China and India – make it a destination for investment.”

“Sri Lanka has undergone a roller coaster ride over the past few years due to a host of factors,” she observed, adding that “over the past few months however, we have seen significant progress in terms of the domestic economy together with notable improvements in the external sector with the country well on its way to a robust economic recovery.”

She continued: “We believe the time is right to consider identifying suitable investment opportunities in the country across a number of asset classes including real estate and stocks.”

Wickramasinghe explained that real estate is a good investment when prices are depressed: “We’ve had many calamities like the Easter [Sunday] attacks and COVID-19 so land prices have not escalated since 2017. Although there is a lot of hype about apartment prices having gone up, they too remain the same relative to their dollar prices, despite labour and construction costs increasing by about 150 percent.”

She also spoke about the ripple effects of the sector experiencing a downtrend in construction over the last four years – mainly the severe shortage of residential developments.

“According to the Central Bank, we require about 100,000 units of housing a year but the private sector only managed to produce a cumulative approximate total of 19,600 apartments – which is only about 4,000 units – last year,” she noted.

Wickramasinghe added: “This year, it’s projected to be even lower – possibly less than 800 units; and the following year would be even worse with estimates falling to around 400 units.”

Future population booms will fuel this accelerated demand even further. “The population is expected to increase from 22 million to 24 million by 2030,” she explained, noting that “the population density in the Colombo District is anticipated to rise substantially from 3,495 to 5,722 people a square kilometre by 2030.”

The Executive Director of Capital TRUST Holdings also discussed stock market related investments.

“The valuations of shares listed on the stock market are most likely to become far more attractive than their peers in the regional frontier and emerging markets as corporate profitability recovers,” she asserted, adding that “investing in the Colombo stock market could provide healthy diversification for investors seeking long-term returns.”

She added that “with the ongoing economic recovery, Sri Lankans should be investing more in the stock market given its relative attractiveness compared to other asset classes.”

Wickramasinghe noted: “Listed companies are expected to generate improved earnings due to a combination of higher top line revenue growth and the decline in interest rates. This presents a good opportunity for investors to identify companies with strong and sustainable growth in line with investment objectives.”

“It’s all about selectivity – identifying sectors that will outperform over the longer term and consequently, selecting stocks within sectors that are poised to record robust earnings, growth and sufficient liquidity,” she elaborated.

Wickramasinghe remains “very optimistic of Sri Lanka’s progress,” noting that “we’re on the right track.”

She explained: “I feel that we have stopped the decades old practice of subsidising everything under the sun. We’ve also started reforming our state owned enterprises, which were highly corrupt and bureaucratic. We still have to change our labour laws to attract foreign direct investments.”

“I’m very positive that things will become good for Sri Lanka if we do the right things,” she concluded.