Sri Lanka real estate and apartment developers who were already facing difficulties had got into further trouble after Covid -19 outbreaks, industry sources said.
Land and real estate firms have seen zero demand after following the corona virus crisis and almost all these companies were already in trouble, a top property developer said adding that the banking crisis triggered byCovid-19 in the US was also linked to failed property firms.
But this situation could be turned it around by introducing certain regulatory measures, pwc Sri Lanka suggested stating that real estate is a key form of collateral for banks and a key economic activity.
Since property cannot be easily liquidated under these circumstances, actions could be taken to ease mechanisms for trading of real estate by eliminating stamp duty and other charges associated with transactions, pwc said.
Foreign ownership laws for real estate could be re-evaluated for the next 2-3 years, particularly in the hotels sector.
Regulators should take steps to enable Real Estate Investment Trusts (REIT) to be formed to acquire real estate assets by pooling of investment funds.
Furthermore, REITs need to carry a practical tax structure and be free from foreign ownership restrictions, pwc suggested.
The government has already introduced moratorium for loans of various sectors and a number of construction firms, which are also engaged in property and apartments, helping the cash flows of the sector will be benefited by this move
Some property firms, especially some who had got into high profile projects, were already in difficulties by this time, industry officials said.
The number of available apartment units is expected to top 10,000 by 2020 at the top end of the luxury apartment market, they said adding that finding buyers would be great problem in the years to come. .
(LI)