COVID-19 pandemic sweeps across the world, not merely spreading disease but diffusing tough luck for the global economy, global health, communities, economies and investments in a forceful defensive stance, the Real estate and construction industry too fell from grace leaving all real estate developers and contractors utterly discouraged said, Blue ocean Group of companies, Chairman, S.Thumilam.
“However, this situation had led to innovative ways of thinking with a drive to minimize the impact on the property market, public health, economies and supply chains. As the Coronavirus induced fear and crisis has engulfed the world as a whole, the International Monetary Fund (IMF) has indicated that the world has already entered into recession.”
However, the Government of Sri Lanka (GOSL) has taken ingenious steps to contain the outbreak imposing a nationwide curfew and announced relief measures that encouraged individuals and businesses to a great extent.
Some of the impactful relief measures enacted include extending deadlines for tax and bill payments, grace period granted for lease payments, suspension of recovery of personal loans, and implementation of a debt moratorium of 6 months for tourism, apparel and medium scale businesses to boost confidence within individuals, businesses and investors and Working Capital Loans at a 4% interest rate per annum. An investment loan facility, not exceeding Rs. 300 million, is also provided at a concessional interest rate for business expansion.
Moreover, the Monetary Board of the Central Bank of Sri Lanka, reviewed its monetary policy stance reducing the Standing Deposit Facility Rate (SDFR), Standing Lending Facility Rate (SLFR) and the Statutory Reserve Ratio (SRR) on all rupee deposit liabilities of licensed commercial banks (LCB). Correspondingly Sri Lanka introduced a new refinance facility for the businesses adversely affected by the COVID-19 outbreak, under the Saubagya (Prosperity) Loan Scheme in an effort to revive these businesses.
Not to mention Central Bank of Sri Lanka (CBSL) made an appeal to Sri Lankans around the world to deposit foreign currency in the domestic banking system to support the government’s battle against the COVID-19 pandemic.
Sri Lanka is certainly quick in responding to such crisis be it social, economic, political or pandemic as such. Thanks to the government immediately adopting precautionary measures to minimise the impact of the virus, Sri Lanka was ranked as the 9th best country in the world for its successful immediate response on tackling the virus by the World Health Organisation (WHO).
While the property market downturn is unique and it is difficult to predict the future, there is evidence to support being optimistic when thinking about the long-term. Markets have historically recovered from downturns and continued to grow. Chances are that the world returns to normal. From SARS to Bird Flu to Ebola, it seems there is always some type of health scare that we are told will alter the course of our existence.
The outbreaks of new, dormant, or even well-known diseases were always a certainty. More epidemics with the potential to become pandemics should here onwards be anticipated. Such potential pandemics are perhaps more frequent than is recognized; in the past 15 years, we have faced at least five: SARS, H5N1, H1N1, Ebola, and Middle East respiratory syndrome (MERS).
If history is any indication, the world is bound to recover sooner than later. Every sphere of the economy, including the real estate sector, will face constraints such as reduced demand and delayed business decisions, but it will recover eventually.
As long-term stewards of capital, developers should act now to help reduce harmful impacts including the direct effect on public health, the severity of the associated economic slowdown, the deepening of inequality in societies and the resulting impacts of all of the above on mental health.
Real Estate Investments have gotten a whole lot more complicated with social distancing measures related to the coronavirus in place, even with government-related entities striving to accommodate it. According to industry veterans, Sri Lanka continues to maintain its reputation as one of the most proactive and safest destinations in the world, where investments in the real estate industry are one of the safest despite the current challenging environment and bets in the world.
Colombo-based Blue Ocean Group of Companies, one of Sri Lanka’s largest publicly traded property developers, is inviting buyers to its online showings and offering financial advisory to its enthused clientele as the financial institutions are in favour of businesses and individuals. The adoption of virtual solutions to some of the constraints the coronavirus has stamped on residential construction underlines a larger, sustained trend in the industry.
While market volatility may be disturbing during a pandemic, according to S. Thumilan, the Chairman of Blue Ocean Group, there are ways investors can stay on track with their investment plan. “To ride out the turmoil investors should avoid continuously checking their portfolio, avoid trying to time the market, avoid fear-based decisions, and review their financial goals to make sure their investments align with them while corporates ensure that the Corporation sticks to its constructive values and serve stakeholders with an open mind to rebuild confidence as the pandemic continues.”
As a real estate and financial expert Thumilan also emphasises that although there is a temporary alteration in the real estate market, the long-term prospects are bright due to the strong regulatory system and the government’s supportive fiscal and financial policies. “I have always believed that Sri Lanka’s real estate market is more strongly placed than most of the developed real estate industries if compared worldwide,” he said further stating that the only industry with appreciating asset is real estate.
Conclusively, the strategy to deal with COVID-19 threat should be to reduce human density and limit social gatherings. These epidemics are not new to this resilient world. Besides every challenge is an opportunity for the human race to come out stronger.
Though Sri Lanka’s real estate sector will be affected, Government actions to contain the virus and active citizen engagement are expected to boost the residential property demand within the next two quarters especially the residential developments sited in prominent locations with less human density.
In addition to the aforementioned surviving mechanisms, the Government of Sri Lanka has also developed general strategies for short and long term economic growth to help the island’s economy pull through intending to make the country one of the top destinations for tourism, business, education, healthcare and real estate. Taking into account the government’s phenomenal efforts to recovery it is certain that Sri Lanka is on the right path to economic prosperity.
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