“This is one of the issues which restricted foreigners buying Sri Lankan apartments. We have been asking to liberalize this area as we believed that investors should have the liberty to buy and sell property at their discretion similar to any other investment,” said the CEO at Overseas Realty Ceylon PLC, Pravir Samarasinghe.
The relaxed rules are expected to boost apartment sales as they will now provide a clear pathway for foreigners to buy as well as invest in apartments, according to another leading property developer.
“The relaxed exchange controls will now provide hassle-free and streamlined ways for foreigners to buy apartments. Apart from that, this will also open up the market for the overseas investors to invest in our condominiums with the option of reselling at a later date,” said the head of Marketing and Sales at Imperial Builders Private Limited, Dilshan Kodituwakku.
Last week the Central Bank relaxed exchange controls relating to condominium industry amid other reforms as a measure of encouraging investments in immovable property, provided the property had originally been acquired and/or developed by such owner through funds remitted into Sri Lanka through international banking channels.
Prior to this reform, it had been a nightmare for a foreigner to take his money out of the system once it was invested in Sri Lankan apartments. Although the investor could repatriate the capital (sales proceeds) at once, the repatriation of the capital gain could only be done on a staggered basis at a maximum of US $ 20,000 per annum over a period of time.
Elaborating further on the new opportunity created, Kodituwakku said Sri Lankan apartments would now offer an attractive investment opportunity for foreign investors especially in the likes of Japanese who can now easily park their near zero cost money with very little risk.
“This policy effective since June 12, 2013 will positively impact the condominium market in Sri Lanka, enabling a transparent gateway for overseas investors. This relaxation of policy by the government of Sri Lanka is timely and is set to drive the demand for property higher,” he added.
Based on a 2013 budget announcement, a letter has reportedly been sent by the Treasury to the Commissioner General of Lands directing him not to registrar land deed transfers including condominiums of foreigners with effect from January 1 in a bid to prohibit sale of state land to foreigners. However the necessary legislations are yet to be drafted.