Global real estate consultancy Jones Lang La Salle (JLL) launched the 10th edition of the Global Real Estate Transparency Index this month. Sri Lanka ranked 66 out of 100 economies this year, improving from its 2016 debut ranking of 69. With peers Myanmar improving by 22 places to rank at 73, and Vietnam ranking at 61 in 2018, Sri Lanka must focus on maintaining its upward momentum in an increasingly competitive market for real estate growth.
JLL’s Global Real Estate Transparency Index meets a strong demand for accessible, in-depth analysis into the domestic property markets of 100 countries and 158 cities around the world. The index quantifies transparency based on 139 variables relating to the transaction process, regulatory and legal frameworks, corporate governance, performance measurement and data availability with higher real estate transparency being associated with stronger investor and corporate real estate activity. In 2016 it included Sri Lanka in its ranking for the first time, creating a sustained dialogue on the varied challenges faced by local and international investors while engaging in real estate transactions in the country.
The new report concurs with industry experts on the need for implementing a number of measures to maintain Sri Lanka’s momentum towards greater transparency in the real estate market. With Asia leading the charge in blockchain and property technology, Sri Lanka has an immense opportunity to leverage disruptive technology in order to implement public access to digital land registry services, digital survey protocols and to liberate planning approvals for public scrutiny. Moreover, there is a strong push for the Government of Sri Lanka to ratify the Foreign Mortgage Law, consider reforms to laws preventing foreigners owning land in Sri Lanka and introduce incentives for buying real such as residency visas.
“Public Private Partnerships are tremendous engines for increased transparency,” noted JLL Sri Lanka Managing Director Steven Mayes. Mr Mayes references projects such as the USD 40 billion Western Region Megapolis Plan, the Colombo Port City and a number of other development projects to be financed via a PPP model. He added, “As the market moves towards consolidated maturity, following a post conflict boom, measures that will enhance clarity and encourage investment include tax breaks and legislation to permit REITs to flourish and designated special economic zones that allow foreign companies the clarity to structure an orderly entry into Sri Lanka.”
JLL’s new report finds that the influx of related-service professionals in Colombo to facilitate large real estate transactions has led to the shortage of commercial office space in the city, with occupancy rates exceeding 95%. The business class, 4-star hotel sector in Colombo is also witnessing a strong demand while certain established 5 star brands languish some way behind. The report also offers a comprehensive overview of the influence of macroeconomic factors affecting the market, including the implementation of the government’s Vision 2025 agenda, spill over effects of key growth sectors such as tourism and the pursuit of international trade agreements.