Condominium Property Sector

There is a growing demand for condominium properties in the Western province. The changing landscape of Sri Lanka’s real estate market could be explained by:

Shifting lifestyles of real estate buyers including broader acceptance of apartment living; Cities becoming accessible and equipped with modern infrastructure; Growing leisure sector across a number of districts; and Scarcity of land in highly populated cities.

People now trend to opt to live in apartments. Apartment living is different from living in normal houses. It is more convenient due to easy maintenance, security and an opportunity to live in a gated community within a secluded environment.
Most of the luxury apartments offer many facilities such as swimming pool, mini super market, jogging tracks, gymnasium and club house.

Demand for condominium properties by expatriate Sri Lankan and foreigners may have peaked or be nearing its peak due their finite numbers.

Foreign investors have been quick to sense the increasing trend in demand. Reputed multinationals such as Hong Kong’s Shangri-la, India’s Krrish and Australia’s Crown joined with local companies to launch luxury apartments or mixed development projects that will change Sri Lanka’s skyline.

In October, global Chinese manufacturing firm AVIC International launched their first real estate project in Sri Lanka. The project consisting of a four tower structure with 602 luxury apartments, one of the largest apartment building projects in post- war Sri Lanka. It is also the first real estate project launched jointly by a Chinese company in collaboration with Sri Lankan government.

Legal Framework

Basic law applicable to property ownership is still the Roman Dutch Law, which did not provide for ownership of horizontal layers of properties above the ground level.
Apartment Ownership Law was enacted in 1973 to replace the Condominium Property Law. This has been amended by Act No 45 of 1982 and further amended by Act No 39 of 2003 giving more and more authority and flexibility to apartment owners and lenders.

Due to the rising demand for condominiums, the government has instituted a Condominium Management Authority, aimed at resolving disputes between the management corporation and the owner or owners, and occupier, or owner and purchaser of the condominium property.

However, shortcomings remain.

A common practice of developers in pre-selling units is to offer a unit of the building based on a rough sketch and collect advance payments. These units are not legally divided and defined condominiums registered at a Land Registry or at a Title Registry. The sales agreements are often one sided favouring the developer. The unwary buyer, not wanting to risk losing the apartment, accepts the terms offered by the developer .

The Apartment Ownership Law does not provide for safeguarding the interests of the buyers in similar situations. The law does not impose mandatory obligations on developers to disclose issues which impact on the prospective buyer’s ownership, such as; the developer’s background, funding for the project, estimated date of completion, whether the project will be expanded with additional units added to the project, the rights of unit owners if expansion takes place, etc. There are many instances when buyers have got caught to developers who have defrauded buyers more than once and continue to do so with impunity.

With the boom in condominium properties, there is urgency on the part of the government to revise and enact laws to safeguard the interests of the buyer and the developer.

The condominium properties will then be a good investment option, risk free and safe for prospective buyers.