Thulci mentioned that the value of land again depends on the purpose and use of the plot. The value will differ from a mixed-use development to a hotel. He further stated that that it will not be too different to the prevailing market rates in Colombo 01.
Aruna stated that when estimating land values there were various factors to be considered. He stated that PwC had looked at the recent transactions that took place and the fact that Port City land transactions will not be outright sales but 99-year leases. The value of land will vary from one plot to the other based on the use and the restrictions specified in the DCR (e.g. No of stories allowed)
Another aspect that needs to be considered is that whether the release of port city land will create an oversupply condition in the market. Also, the fact that the land is within the port city may demand a premium due to its location. Considering all these, a conservative value of approximately 13 million a perch was decided, but it could vary from one plot to another.
On the supply of land, Thulci mentioned that Port City has access to a large pool of prime land plots and will ensure that market will not be flooded so that the prices will not really bottom out. He further mentioned that they will be strategically releasing those lands parcels into the market and therefore there will not be a slump in prices or an unusual increase.
In terms of recent sales volumes, it is evident that post Easter Sunday attacks and the COVID-19 pandemic, it has significantly slowed. However, once the situation reaches some normalcy average velocity of apartments per month will be around 50 to 60 a month and it may take five years from now for the existing unsold inventory to be sold. By the time, Port City comes to the market it will take another four to five years. Hence, Port City is confident that it will not be flooding the existing market. Furthermore, he mentioned that historical demand patterns indicate that 90 to 95 percent of the demand has been from Sri Lankans and Sri Lankan Expats. He further highlighted that Sri Lanka has not really even scratched the surface of attracting foreigners to invest in apartments. He further mentioned that Port City does not therefore foresee an oversupply condition.
Advisory Leader / Chief Operating Officer, PwC Sri Lanka
Tel: +94 11 771 9700 ext.5002