The country’s
condominium developers have requested permission to return
to work and resume their construction projects, which are
stalled due to the lockdowns, as soon as practically
possible and expect relief from the government.
The association said the only way to lessen the crisis is to
resume the activities.
The association said the resumption of work in the
construction sites could be done based on clear regulations
and restrictions as advised by the health authorities.
“The property development industry is the primary employer
and revenue source for the majority of professional
construction firms, as well as thousands of SMEs across the
economy, from small-scale building material providers, to
manufacturers and installers of a range of finished goods
and equipment.
A slowdown in the development activity will have immediate
impacts on these firms (and their employees), which will
only get resolved when the development projects are able to
move forward,” the letter said.
The construction sector was among the first major industries
to feel the pinch from the coronavirus with its inability to
source materials and equipment needed when the virus was
fast spreading in China.
The association also sought clarification on the
government’s import ban on non-essential items since early
April, as the sector is seeking permission to bring down
project-related materials.
The Export Development Board (EDB) last week said it has got
the authority to import items used in export manufacturing.
The association also sought the suspension of certain para-tariffs
such as PAL, CESS and other levies on project-related
material imports for a stipulated time, to reduce the cost
structure and cash flow pressure at a time when revenue
flows have constrained.
Further, the association requested the government to include
the property developers as part of the relief package
announced by the Central Bank on loan moratoriums and
concessionary rate working capital loans.
The package was mainly aimed at providing relief to micro,
small and medium-sized enterprises and self-employed and
employed persons.
“With very large capital outlays for our projects, the
developers are among the first to go into financial distress
with an economic downturn. The cascading effect of
suspension of development projects will ripple through the
economy at multiple levels as banks, personal investments of
homebuyers and hundreds of thousands of jobs will be at
risk,” the letter read. The association also urged the
government to expedite the implementation of real estate
investment trusts (REITs) and related legislations to
facilitate the equity needed for the new projects, which
will stimulate long-term investments in real estate and help
stabilise the property prices.
REITs will reduce the banks’ exposure for price fluctuations
in lands and property.
Meanwhile, the association also sought extensions to the
project periods for the Board of Investment (BOI) projects
enjoying certain concessions, due to the delays caused by
the lockdowns and supply chain issues.
Further concessions were sought to attract new investments
into the sector, considering the tough environment for
attracting foreign direct investments.
At the same time, the association also requested, albeit
controversial, the government to encourage foreign buying of
Sri Lankan real estate. “Allowing foreigners currently based
in Sri Lanka to purchase apartments with their domestic
earnings (without having to remit from overseas), allowing
expats to finance a portion of their purchase price through
domestic banks in LKR, provided the major part is remitted
from overseas and liberalising regulations for long-term
resident visas, are among some of the interventions that
would help in this regard,” the letter said.