Paradise found
In Sri Lanka everything including tourism is on the up, and the beautiful old-colonial homes are already topping investors’ wish lists, says Andre Cooray
‘‘Alternatively, inland from the beach, you can find stunning period homes from 120 to 150 years-old, with original teak windows and doors, and gorgeous stonework’’
Sri Lanka is a tropical island with achingly stunning beaches, ecological marvels, an ancient culture and exotic cuisine – proving that the country, formerly known as Ceylon, can serve up more than just a really good cup of tea. Large plots of land with postcard-perfect views are up for grabs, in a place where space is still an affordable luxury. Now that a civil war, lasting almost three decades, is over, this paradise lost, can finally live up to its full potential – and the promise of peace means there may be a sizable pot of gold for investors, or perhaps a nice big holiday or retirement home at the end of the rainbow.
“Since the end of the war earlier this year, Sri Lanka has become a country of huge interest for investors previously active in countries such as Indonesia and Thailand. Foreign investors are flocking to the island due to the wide choice of prime land plots still available at much lower prices than other parts of Asia. [They are drawn] to the unique colonial-style houses and acreage available throughout the country and in particular along the west and southern coastline,” says Sue Fitzgerald, managing director for Property Perfect, whose Hong Kong-based consultancy has specialised in the Sri Lanka market for the past eight years.
Post-war Sri Lanka could even become the “Hong Kong of India”, at least that’s what HSBC Private Bank told Bloomberg in June this year. The country’s strategically positioned port, coupled with its close proximity to the world’s second largest economy, India, resembling Hong Kong’s partnership with mainland China, has financial experts predicting a big boost in business opportunities for its export sector. In addition, Roman Scot, the managing director of Bloomberg, during an interview with a local TV channel in Singapore this September, said that peace could push the country’s wartime GDP of 6.6 percent to 9 percent.
Also highly optimistic, is the Board of Investment (BOI) of Sri Lanka which expects foreign investments – with ports, tourism, telecommunication and textiles at the helm – to quadruple to US$4 billion by 2012. Tourist arrivals already increased by 34 percent this August compared to the same time last year. What’s more, significant increases in visitors from Europe were recorded during this period: while the number of UK tourists rose 17 percent, the number of travellers from Germany rose by 71 percent, from Switzerland by 91 percent, and France by 109 percent.
“Investors from Dubai, Singapore, London and Russia are interested in the most popular areas such as Kandy, Bentota and along the southern coast from Hikkaduwa to Tangalle. [Their aim is] to secure a piece of prime land or a villa with a view. The most popular properties requested are colonial-style houses with heritage value, beach houses or land or houses inland with acreage and lake or paddy views,” reveals Fitzgerald, who believes that property along the southern coast from Galle Fort to Mirissa is destined to surge significantly in the coming year.
Property prices in the charismatic area of Galle Fort range from US$450,000 (HK$3.5 million) to US$3 million depending on size and location. “Beach land is harder to locate these days but it is still possible to find 17,696 square foot of land for US$260,000 including an old house perfect for renovation,” Fitzgerald says. “I’d recommend the beach areas of Talpe, Koggala, Mirrisa and Tangalle as there is still land available to buy and it has some of the most beautiful beaches.”
On Talpe beach, prices for a three-bedroom villa set on a 16,335-square-foot to 27,225-square-foot plot of land start at US$300,000. In order to get your hands on land with a prime view, Fitzgerald even suggests clients opt to demolish the existing property. For instance, she has a 17,696-square-foot plot at Talpe beach on her books at the moment, which features a house in a poor state of repair. The land and house come in at US$260,000, and she says it’s an ideal spot to do away with the old and build a modern villa. “The plot has a superb view on both sides, and is on one of the safest beaches in the area due to a natural reef, which protected the coastline from the effects of the [2004] tsunami,” she explains.
Alternatively, inland from the beach, you can find stunning period homes from 120 to 150 years-old, with original teak windows and doors, and gorgeous stonework. One such villa is now selling on Property Perfect’s website for US$450,000. It has four bedrooms and a 15-metre infinity pool, and its landscaped garden overlooks a paddy field. Influences from Sri Lanka’s former colonisers, the British, Dutch and Portuguese, have been preserved in its architecture.
Colonial homes are located all over the country and, according to Fitzgerald, those looking for a high-quality renovated property should focus on the Galle Fort area, which is a 300-year-old UNESCO heritage site.
“These historical houses are very attractive to buyers from all over the world but particularly investors from Singapore, Hong Kong, the UK, and Dubai,” says Fitzgerald. In and around Galle Fort, you can still find 2,690-square-foot colonial homes on plots of land ranging from 5,445 square foot to 13,612 square foot. Prices start at US$450,000. That said, it’s possible to snap up period homes pre-renovation, much more cheaply. One such example, is a 150-year-old villa with a one-acre landscaped garden, situated 12 kilometres from Galle Fort in Ahnagama and 5 kilometres from the beach. It’s now selling for US$100,000 – “an absolute steal”, says Fitzgerald.
Fitzgerald strongly recommends seeking professional advice before securing a property because the real estate market in Sri Lanka is unregulated. To avoid heavy taxation, most buyers set up a BOI company and buy property through that company, she explains. Another option is to take a 99-year lease, reducing the tax to only 7 percent.
For those interested in condominiums, apartments above the fourth floor are exempt from Sri Lanka’s heavier property taxes. It’s worth noting that in the capital Colombo, a slew of new condominiums, popular among Sri Lankan expatriates, are changing the city’s skyline.
“The market is cooking at the moment as all eyes are on Sri Lanka since the end of the war. With its incredible coastline, numerous cultural sites and beautiful people, Sri Lanka is set to rival the likes of Thailand, Indonesia and Malaysia as a tourist destination,” says Fitzgerald. “English is widely spoken throughout the island making it easy for tourists to visit most places.”
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