A robust effort with policy-level and systematic changes is vital to envisioning a positive outlook for Sri Lanka’s real estate sector post-crisis.
To avoid a potential housing shortage, understanding the current state of the country’s realty sector and implementing a recovery plan is vital.
This is especially important in Colombo’s central area, where the effects of unaffordable housing for most citizens and a deteriorating national transport infrastructure are already evident.
Affordable housing is a pressing issue in Sri Lanka, as the demand for housing continues to outpace supply. With a growing population and urbanisation, there is an urgent need to provide affordable housing solutions for people.
As a result, several key pillars must be identified to shape the ideal vision for Sri Lanka’s real estate landscape to rectify this alarming situation and provide solutions for upper-middle, lower-middle, and low-income communities seeking settlement in or around the Colombo Metropolitan Area.
The Government has been continuously focused on overall infrastructure development and mega-projects, lacking a comprehensive plan to address the social housing problem. This problem is further fuelled by aggressive import duties on essential construction items and the extremely high VAT on apartments, causing Colombo’s construction costs to be one of the highest in Asia.
The most significant impact falls on the lowest-income groups. These communities mainly find work in security, cleaning, or food preparation, roles that can’t be performed remotely. So they have the least amount of disposable time to spend on long commutes. Furthermore, even banks hesitate to lend to low-income groups, making it seemingly impossible for them to enter the housing market.
Given the current situation, the government should consider easing excessive taxes that have depressed the real estate sector. This move can help revive traditional living for Sri Lankans within the country instead of pushing local communities to migrate elsewhere. This approach can also retain the nation’s talented workforce.
Cross-subsidisation schemes, as seen in Mumbai, are effective ways to address this crisis. However, overall policy, tax, and procedural reforms are essential to prevent inefficiencies that could worsen the issue.
Role of technology
Technology has the power to transform industries, and the real estate sector is no exception. In Sri Lanka, technology can play a crucial role in addressing the challenges faced by the industry, particularly in the area of affordable housing. Here are some key ways in which technology can revolutionise the real estate sector:
1. Online property portals: Online property portals provide a platform for buyers and sellers to connect, making the process of buying or renting a property more efficient and transparent. These portals can increase the visibility of affordable housing options and reach a wider audience.
2. Virtual Reality and Augmented Reality: VR and AR technologies can provide potential buyers with a virtual tour of properties, allowing them to experience the space without physically visiting it. This can be particularly beneficial for buyers who are unable to visit the property due to distance or time constraints.
3. Smart Homes: The concept of smart homes is gaining popularity worldwide, and Sri Lanka can leverage this technology to develop affordable housing options. Smart homes use automation and connectivity to enhance the living experience while reducing energy consumption and maintenance costs.
4. Data analytics: By leveraging data analytics, real estate developers and policymakers can gain valuable insights into market trends, demand-supply dynamics, and pricing patterns. This can help make informed decisions and develop targeted strategies to address the affordable housing crisis.
The way forward
Collaboration between the government, private sector, and technology providers is crucial to achieving a vision of affordable housing and technology-driven growth in Sri Lanka’s real estate sector. The government should introduce policies and incentives to encourage the development of affordable housing projects while also promoting the adoption of technology in the sector. The private sector, on the other hand, should invest in innovative technologies and partnerships to drive the growth of affordable housing options.
In a nutshell, affordable housing and technology are two key pillars of growth for Sri Lanka’s real estate sector.
By prioritising affordable housing and leveraging technology, the industry can not only address the housing crisis but also drive economic growth and improve the quality of life for all Sri Lankans. It is time for all stakeholders to come together and work towards realising this vision for a better future.
The writer is the chairperson of a property development company in Colombo.