Mortgage expansion and REIT reform way forward for real estate growth: experts

SRI Lanka's real estate sector is not short of demand but of financial and legal structures, said industry leaders recently, highlighting mortgage expansion and a functioning REIT market as key to future growth.

- BY DIVYA THOTAWATTE

This discussion took place at an exclusive evening session titled 'Real Estate Reimagined: Investment Opportunities in a Transforming Market.' The session, organised by the CFA Society Sri Lanka, in association with Prime Group and John Keells Properties, examined emerging investment opportunities and strategic considerations within Sri Lanka's rapidly evolving real estate sector, against the backdrop of economic shifts and market transformation.

The resource panel featured Prime Group Founder and Chairman Premalal Brahmanage, John Keells Properties Asset Management Head and John Keells Holdings Vice President Rusiru Abeyasinghe, and FJ & G. De Saram Partner Manjula Ellepola.

They highlighted that despite many challenges to real estate growth, Sri Lanka was entering a structural shift in housing finance that could transform the sector.

Abeyasinghe said, "Sri Lanka has been a very low mortgage exposure country. Only about 10% of the bank assets are in mortgages. There has been very little innovation in products on that end. But of late, we are seeing that happening."

Banks were beginning to move beyond traditional lending limits, he said, noting that banks were now lending 100% mortgages and, sometimes, even up to 120%, subject to stringent approval checks.

According to Abeyasinghe, expanding beyond the previous 70-80% loan-to-value was encouraging as it would make mortgages more accessible to a larger portion of the population, enabling more people to enter the housing and apartment markets. He added that increasing the share of mortgages within the banking system would be beneficial as the sector transformed further.