Interview : Anthony Couse
Which technological advancements in building and urban planning could make real estate markets in Asia more competitive?
ANTHONY COUSE: Real estate is a complex, people-centric and labour-intensive sector. However, property technology, or proptech, has begun to reshape the entire industry, with many start-ups striving to develop solutions to improve the services we use to buy, sell, rent, build or manage residential and commercial properties. I foresee the Asia-Pacific region leading the proptech charge, despite the US and countries in Europe having a head start. Proptech is likely to drive the growth of smart cities – cities that are empowered by technology and other intelligent solutions to manage and improve the lives of their people. With large populations, growing middle classes and increasing internet penetration rates, Asian cities are well placed to outpace their global counterparts.
How can initiatives and policy changes increase private sector participation in infrastructure projects across the region?
COUSE: China’s Belt and Road Initiative – the world’s largest infrastructure project with close to $1trn of investment coming from around the world – is likely to be a significant factor. At the Belt Road Forum for International Cooperation in June, China promised to invest some $124bn in countries along the Belt and Road Initiative. One of the biggest beneficiaries of the policy so far has been Sri Lanka, which is reportedly set to receive $24bn on top of the $8bn it has already been allocated. Sri Lanka has seen increasing private sector participation over the last six years, indicating positive sentiment and high expectations for what the country has to offer.
Until now, Sri Lanka has relied primarily on public funds, as well as debt from bilateral agencies for infrastructure development, rarely relying on financing from the private sector. The government’s new public-private partnership (PPP) division was set up to promote collaboration between the private and public sector. Considering the need to fill infrastructure gaps, PPPs could well be a game-changer in the effort to achieve sector goals. Such strategies are becoming increasingly essential, as current public finance reserves would not be able to sustain the level of growth the infrastructure sector demands.
What regulatory framework reforms would help channel foreign direct investment (FDI) into major Sri Lankan real estate projects?
COUSE: While FDI into Sri Lanka has not increased annually over the last six years, it has stabilised at $1bn per year since 2011. FDI fell to $450m in 2016, a 50% decrease on the $970m seen the previous year. However, foreign investors’ confidence in Sri Lanka has continued along with their risk appetite, as seen in their 30% stake in total FDI.
The main regulatory framework challenges involve inconsistent tax and economic policies. There is an urgent need to revisit these areas to attract more investment into the country, especially considering the government’s FDI target of $4bn for 2020.
Major roadblocks to FDI within the real estate sector involve land ownership, company holding structures and incentives. To overcome these hurdles, the government can look into further incentivising certain areas such as special economic zones or tech parks via tax holidays, and relaxing import duties for the construction industry.
The government has understood the need for change in current regulations (primarily in taxation and land ownership) and has introduced new initiatives. For example, the Agency of Development will be developed into a fully fledged zoning body empowered to approve projects in 10 working days. The proposed agency will issue licences directly to investors, which will further drive FDI in Sri Lanka.
Read More from OBG
Community development: Hamad Hareb Al Muhairi, Director-General, Abu Dhabi Housing Authority (ADHA), on financially and environmentally sustainable initiatives to meet rising demand for housing
Interview: Hamad Hareb Al Muhairi In what ways has recent population growth affected the housing market, and what strategies can address increased demand? HAMAD HAREB AL MUHAIRI: Abu Dhabi is committed to maintaining growth in all economic sectors, including government housing. Based on its role in developing and implementing housing programmes for UAE citizens, and setting related regulations and legislation, ADHA has adopted a flexible business strategy that considers the impact of popula…
Focus Report: Exploring the role of women and youth in Africa's agriculture sector
En Français The last few years have seen marked developments in the dynamic landscape of African agriculture. The continent's cultivated land has expanded significantly since 2020, contributing to 52% of the global increase in cultivated area, with sub-Saharan Africa leading agricultural output growth. This report highlights the importance of transitioning to knowledge-based farming systems through initiatives from organisations seeking to achieve sustainable, inclusive and productive g…
“High-Level Discussions are Under Way to Identify How We Can Restructure Funding For Health Care Services”
Popular Sectors in Sri Lanka
Popular Countries in Construction
Recent Reports in Sri Lanka