"..The regulatory changes contemplated by the Government on foreign ownership of property could have an adverse impact on the real estate sector and is a concern to the Company," the firm told shareholders in the annual report.
Overseas Realty (Ceylon) Plc, a firm controlled by Singapore's S P Tao group is building Havelock City' through Mireka Capital Land, a joint venture with state-run Bank of Ceylon.
Despite the end of a 30-year war in 2009, analysts say new risks are emerging in the island to hurt investors in Sri Lanka amid a rise of nationalism and undermining of rule of law and justice.
Rulers have resumed expropriating property of citizens, which analysts say could turn out to be worse than terrorism risk as expropriation is a calculated targeting of citizens by the state with the full force of the law and police unlike random acts of violence.
Assets of several firms including two listed companies were expropriated by the state through a controversial law in 2011 which left no room for judicial review.
Restricting the ability of citizens to sell property to foreigners, which analysts have said is a subset of East European style 'rural nationalism' is the latest threat and an undermining of people's freehold property rights.
Meanwhile Havelock city said it was going ahead with the development of the second and third stages, with a recent fall in the rupee and higher interest rates also hurting the market.
"Despite these challenges, given the uniqueness of the concept and development and its superior build quality and total offering we expect the Havelock City residential sales to continue to register strong growth through 2013," the company said.
The complex cited on an 18 acre land in Colombo's Havelock Town area will have 1,100 apartments.
Chairman S P Tao also told shareholders that he was optimistic.
"The evolution of Sri Lanka's residential real estate market driven by increasing cost of land in Colombo and rapid urbanisation of the population, along with changing lifestyles are fuelling demand of condominium residencies in central Colombo,.."Tao said.
"..Traditional villas and detached houses are being pushed to the peripheral greater Colombo areas.
"This augurs well for the future outlook of Havelock City."
Mireka Homes (Pvt) Ltd, which is building the apartments had completed the sale of phase 01, residential apartments and had pre-sold 50 percent of the 219 apartment twin tower second phase.
The firm is expecting to finish construction of phase 01 by May 2014. The superstructure of tower C had reached level 11 and in tower D it had level 06 by end 2012, the firm said.
The construction of a clubhouse with 55,000 square feet of recreational facilities, including a gymnasium, day care centre, swimming pools, Jacuzzi, badmington, basketball and squash courts, mini cinema, is expected to be finished by Augusts 2013.
Phase 02 is made up for four towers with 600 apartments.
The firm plans to begin construction and pre-selling of the third stage at the end of 2013 or beginning of 2014 based on the progress of the stage II.
Havelock City is also expected to have the biggest shopping mall in Colombo.