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Tuesday February 27th, 2024

Mapping Real Estate’s Future with Minoli Wickramasinghe

Minoli Wickramasinghe, Managing Director of Capital Trust Properties Group and Executive Director of Capital Trust Holdings, delves into the dynamics of Sri Lanka’s real estate landscape and emerging prospects. 

A subsidiary of Capital Trust Holdings, Capital Trust Properties consistently distinguishes itself, being among the group’s portfolio of the country’s top rankers in its respective field of the 25 subsidiaries. Capital Trust Securities, the group’s marquee stock broking entity, also has continually dominated its position in the Colombo Stock Exchange over the years and is ranked number One in terms of turnover, brokerage turnover and the number of transactions in year 2021, FY 2021/22, and year 2022, FY 2022/23. In FY 2022/23, the property firm marked a significant achievement, leading both residential and commercial sales in Sri Lanka, giving Wickramasinghe a clear view of the emerging challenges and trends. 

Can you take us through the inception and evolution of Capital Trust Properties, milestones along its journey and recent performance?
I founded Capital Trust Properties in 2010 with a modest team of two and from day one; we set the standard in professional real estate transactions and advisory services and are the largest real estate transactional and advisory company in the country. Our growth trajectory has been remarkable, and today we are recognized experts in our domain. We proudly serve as the local transactional arm for esteemed global firms like Knight Frank, CBRE, and Colliers in Sri Lanka.

Navigating an industry as unregulated as real estate in Sri Lanka has been a challenge. Our journey was marked by obstacles such as the country’s economic setbacks due to the Easter attack, the impact of COVID, fluctuating tax policies and interest rates. Yet, our lean and efficient structure prepared us to guide clients with timely investment decisions, especially during economic downturns. We managed to achieve the highest turnover in residential and commercial sales during challenging times, a testament to our team’s resilience. Our employees often multitask, as seen in many international firms, and their contributions are integral to our organization.

Our unparalleled knowledge of the local real estate market as we are also investors and developers, allows us to predict trends accurately. As we handle a significant portion of transactions, especially in luxury apartments, Capital Trust Properties has become a trusted name in transaction and advisory services for all stakeholders, from commercial to residential real estate owners. We’ve actively supported landlords, ensuring they set competitive charges without compromising their income, leading to many Grade A commercial offices adjusting charges based on the fluctuating Rupee.

Embracing technology, we’ve digitalized a majority of our services and are committed to continually integrating tech advancements to enhance stakeholder experiences. Additionally, we’ve expanded into property valuations, employing the industry’s most qualified experts.

How has Capital Trust Properties managed to stand out and succeed in the tough real estate market?

Navigating our journey to our current stature has been challenging, but our unwavering belief in our employees has been our bedrock. Our team, comprising dedicated and professional individuals, has been pivotal to our success. With an agile operational structure, Capital Trust Properties has demonstrated exceptional adaptability. We proactively eliminated unnecessary costs and continuously sought more efficient service delivery methods.

The onset of COVID-19 tested our agility, and we rose to the challenge by swiftly transitioning to remote work. This flexibility has since become an integral part of our operations, allowing us to work more efficiently while always keeping an eye on our goals. Our foresight led us to expand into new ventures like short-term stays and property valuations.

In recognition of our efforts and leadership, I was honoured with the “Leadership in Real Estate and Construction” award at the 2023 Women in Management (WIM) awards, a collaboration between IFC and the Australian Government. My entrepreneurial journey as a woman has also been celebrated with several international accolades.

Furthermore, Capital Trust Residencies, our Property Development Company, which I co-founded alongside my husband Tushan Wickramasinghe, has garnered recognition on the international stage. We’ve been awarded the Asia Pacific 7 awards such as Best Boutique Developer, and Best Condominium for our three apartment complexes: Capital Trust Residencies Thimbirigasyaya, Capital Trust Residencies Vajira Road, and Capital Trust Residencies Fortress.

What is your outlook for real estate in Sri Lanka? Any specific areas that seem promising?
Over the past four years, the real estate sector has faced significant challenges, notably in construction, due to import restrictions, increased project financing costs, and stalled bank lending, exacerbated by inflation, which alone boosted construction costs by 150%.

The industry also suffers from a lack of real estate refinancing options and previously sky-high interest rates of up to 29%. While rates are declining to around 16 -18%, the repercussions of previous rates linger. The industry’s struggles are highlighted by a stark construction shortfall, especially in residential housing. As the population is projected to grow to 24 million by 2030, there is a need for 100,000 housing units yearly, as per CBSL data. Yet, only about 19,600 apartments have been developed so far with just 4,000 last year and even fewer expected this year. The increasing population density in the Colombo District further emphasizes the urgent demand for residential properties, thus the need for residential real estate is undeniable and imminent.

What changes or challenges will confront the real estate industry, and how is your company geared for them?
To increase revenues, the government introduced hefty taxes on the property sector, including a 15% VAT, 2.5% Special Commodity Levy, 4% stamp duty, and 10% capital gains tax. Our research with Tier 1 and Tier 2 developers revealed these taxes led to a 98% sales slump, suggesting the tax policy hampers economic growth. Consequently, we’ve urged the government to re-evaluate these taxes as now there is a slump even in receiving 4% stamp duty.

Capital Trust Residencies, amid this uncertainty, has paused new projects and kept the six lands, which were purchased, awaiting favourable government reforms and demand stimulation. While Sri Lanka’s real estate potential is undeniable, its appeal needs enhancement before enticing multinational development collaborations.

Conversely, Capital Trust Properties has flourished, partnering with three global real estate giants and assisting commercial landlords in leasing endeavours. We offer end-to-end services, from initial property due diligence of the client’s requirement to evaluating the perfect fit, inclusive of legal, valuation, and interior fit-out. Recognized as the primary Transaction Advisor for top-tier developers, we executed more than 100, Tier 1 Residential transactions in 2022. We aim to emerge as a regional beacon in real estate transactions and advisory.

How does Capital Trust Properties plan to help investors find the best real estate opportunities in Sri Lanka?
We pride ourselves in our professionalism, impartiality, and ethical standards. Our credibility in the industry is evident in the vast network of collaborations we have fostered. Reputed commercial and residential developers trust us and have partnered with us. Our extensive listings encompass houses, lands, warehouses, factories, apartments, villas, estates, and more.

Consequently, when an investor approaches us seeking a property, we conduct a comprehensive feasibility study in addition to the Real Estate Research we do, to determine their ideal match and provide tailored recommendations to meet their needs.