Indian realty firms redraw strategy in SL

Since the end of the 30-year-long separatist war in Sri Lanka in 2009, several major Indian real estate companies began projects in Colombo with the hope of cashing in on post-war interest among well-heeled Lankans in acquiring luxury apartments with a variety of facilities.

Among the Indian companies to launch projects in the capital city had been L and T, Accor Developers, Eco Homes, Shreyas Developers, Suchir India and Krrish.

However, many of them failed to take off. They have had to wind up their businesses and quit, leaving flat buyers in the lurch. This trend had caused concern among India’s policy makers and those promoting Indian investment in Sri Lanka.

But attempts were now being made by a section of the investors to diagnose the problem and take corrective steps. A source in the realty sector told Express that the basic mistake that the Indian investors made was that they expected the Indian model to work in Sri Lanka and were shocked to find that it did not.

“In India, the promoter first seeks bookings from buyers and finances the venture with the advances made. But this is not the system in Sri Lanka. Here, flats are sold after they are almost built fully. Therefore, in Sri Lanka, if an Indian developer had expected 100 bookings, he might have got only 10, ” said a source in Platinum 1, an ambitious Indian condominium project coming up in a prime area in Colombo, which was working on the basis of the Sri Lankan model.

“We at the Platinum Realty Investment Pvt Ltd decided to complete the work up to the super structure level before announcing the launch of the project. Today, the customer can walk-in and view his chosen space prior to purchase. This provides the potential investor with the peace of mind that comes with knowing that his investment is secure. Platinum l is not just an ambitious plan on paper,” the source said.

The company, which was a consortium of Paharpur Cooling Towers Group of India and Pragnya Fund, a Mauritius-based Private Equity Fund, had already spent USD 20 million out of the USD 35 million earmarked for the 70-apartment project.