A new act is needed to protect consumers and foster the condominium industry. There should be a new law that can keep pace with the changing needs of consumers and business. That will also support the economy and will help to create more jobs.

The condominium industry was a vibrant and growing part of the Sri Lanka real estate sector. In Colombo and the suburbs the market was particularly dynamic. The majority of housing starts in the country, in the last five years have been condominiums. This includes housing estates, and they should definitely come under the condominium concept to protect buyers.

However, there has been a sharp drop in condo sales, and it has almost reached a crisis point. The banks are reluctant to give mortgages for condominium buyers and also to fund condominium projects. This situation can be viewed as a short term crisis. There could be a dramatic change in the market when the war is brought under control.

For serious buyers now is the time to look around and make decisions. There are over 4000 new condominium apartments in the market. With the escalating cost of building materials, and all other related costs also going up, condominium prices will increase when the market gets active again. Our inflation rate is very high and real estate is a solid investment and a hedge against inflation.

There is a steady demand for condos priced below Rs.8 million. This is the affordable price range for the great majority of Sri Lankan home buyers. Therefore, developers should not ignore this market. The government should give more incentives and concessions including land to the developers who cater to this segment of the industry.

· Will there be a continued demand for luxury condominiums?

More affluent Sri Lankan home buyers will go for luxury condominiums. These are in the Rs.30 million range or higher. There are investors who buy condominiums in the range of Rs.30 to 60 million. There will be a demand for these condominiums when the political situation improves.

This will happen when there is a comprehensive economic development plan and it is effectively implemented. Foreign investment is an important factor. The large number of Sri Lankans living overseas will come back to the local condominium market, when the security situation improves.

Condominiums are not everyone’s cup of tea, but this is the best alternative home ownership style in urban areas. It is often said that buying a condominium is buying a lifestyle. It will give you an instant community feeling, and also provides more security and hassle free living, with all the benefits and facilities available.

It is imperative that the developers change their marketing strategy and conduct awareness programmes on condominium living to attract prospective buyers. Facilities and benefits available should be clearly highlighted. There should be professional condominium sales executives and property managers engaged in this industry. They should have an in depth knowledge of the concept, to make prospective purchasers comfortable and confident of this relatively new home ownership style.

Group insurance, travel, medical, dental and bulk buying programmes can be introduced for the benefit of unit owners. A lot of recreational activities and sports tours should be arranged.

‘Less luggage, more comfort, make your journey pleasant.’ The decision to live in a condominium is also a decision to change the lifestyle. The residents who have already taken these decisions are sure to enjoy living in a well managed condominium.

The world economy is moving towards the East. China and India are going to be the economic super powers. There is no reason for any serious investors to bypass Sri Lanka. There will be a real estate boom. Therefore, this is the most appropriate time to bring changes to the Condominium Act.

The definition of ‘condominium’ is often too rigid to permit new and more dynamic forms of condominium ownership. The Apartment Ownership Act was last revised in 2003. Since then many condominium owners, property managers and other individuals who are engaged in this industry have become disenchanted with the act. The current framework of rights and responsibilities are being seen as out of focus. Responsibilities are not clear and the legislation is often inflexible.

The new types of condominiums are: Vacant land condominiums, common elements condominiums, amalgamated condominiums, phased condominiums, leasehold condominiums and industrial condominiums.

These new types will allow the industry to address a variety of consumer needs by allowing freehold and leasehold condominiums beyond the standard condominium types now in existence.

Standard condominiums should also be given approval to construct on leasehold lands. Institutional lands can be used for condominium projects, and these institutions can still hold title to the property and earned revenue too. Leasehold condominiums can also be developed on government owned lands. This type of condominiums will reduce the unit prices considerably.

The Common Elements Condominiums can be a ground breaking concept, increasing the range of options in planning and designing, community housing and resort type projects. All housing estates will also come under this type of condominium. This will give increased protection to the consumers/homebuyers.

The new act should provide increased protection to the consumer through more detailed disclosure requirements prior to the sale of a condominium. The following issues must also be addressed in the new act.

An owner’s share, on termination of a condominium, after the life span is over, will be significantly small. However, if the condominium is maintained properly the building will ‘last for ever.’ The condominium managers have a major responsibility to make sure these buildings are well maintained.

The condominiums built during the building boom in the 1980s are now completing their first life cycle. Now they are facing major repairs. Reserve funds established during the creation of these condominiums were not meeting replacement and repair costs needed.

There should be mandatory post construction audits of common elements carried out by independent engineers. Ongoing reserve fund studies should also be conducted to ensure adequate funding is available for repairs throughout the life of the condominium.

The new act must also offer alternatives for resolving disputes between condominium corporations and unit owners, such as mediation or arbitration. The buyers should find out the percentage of units the developer intends to lease, as this will give an idea of how many tenants are going to be in the building.

If the board makes occupancy standard by-laws, this would help to control overcrowding that may result from renting out units.

The new act should cover the secondary sales of condominiums, and by-laws should be introduced to protect the purchasers.

Renting of condominiums should also be regulated by a condominium corporation to ensure that no undesirable tenants move in to the building.

Regulations to the Condominium Act must be developed after extensive consultations with many stakeholders, including unit-owner associations, condominium managers, developers, planners, engineers, architects and solicitors.

The Ministries of Housing, Urban Development, and Consumer Affairs have to join with stakeholders to develop a solid regulatory framework. These ministries must combine the expertise of their own personnel with that of the industry experts to produce regulations which will deal with a variety of novel and complex condominium concepts.

However, the task of drafting the regulations to accompany the new concepts in the new act can be monumental. The whole exercise is to develop a solid regulatory framework that will enhance legislation which will help and protect everyone in the industry.

The introduction of a 5% tax of the total construction cost is a heavy burden at a time of escalating building material costs and other overheads. Therefore the government should abolish this tax.

It is an established fact that the real estate industry makes an important contribution to the economy of a country and the welfare of its people. The economy as a whole and the people will benefit when there is increased activity in the construction business.

Engineers, architects, solicitors, valuers, land surveyors, quantity surveyors, masons, carpenters, labourers and there are so many others who benefit directly from this business. There are others who enjoy benefits indirectly as a result of the real estate business.

This is not the time to impose heavy taxes on the developers as there are already struggling under the prevailing conditions. The government should have a dialogue with developers and introduce ways to boost the industry for the sake of the country.

The developers and the contractors should form an association to make it a strong lobby group. They should be able to advise and work with the government on all real estate issues affecting the industry and the country. This is done in most developed countries.

Multiple entry visas should be issued to foreigners who buy luxury condominiums. They should be given incentives to spend more time and money in Sri Lanka. The condominium industry should work together with the tourist Industry as building resort condominiums and apartments for tourists will help both industries.

There have been 250,000 British citizens who have bought tourist condos and chalets in Spain. This brings the Spanish economy a large amount of foreign exchange regularly. It has created many jobs and businesses as a result.

The government should assist developers to have access to foreign funds with more reasonable interest rates to keep the industry moving.

There are many ways the government, condominium and the tourist industry can work together for the greater benefit of the country and these industries.

The writer is a graduate of the University of Ceylon, Peradeniya. He is an award winning realtor in Canada, with wide experience in all aspects of real estate including the Condominium Concept.

Finco Limited, the authorised distributor in Sri Lanka for BASF construction chemicals (formerly Master Builders Technologies) has opened a new showroom in Negombo to better serve its customers north of Colombo.

The new outlet located at Colombo Road, Negombo, displays a wide range of products including construction chemicals relating to waterproofing, concrete admixtures, industrial grouts and various types of industrial flooring.

Managing Director of Finco Limited, Rohan Delgoda said the opening of a showroom in Negombo fulfills a long-felt need, as many Finco customers live in this area. "Previously customers had to come, either to the Finco Head Office in Modera or to our sales outlets in Colombo to purchase our products. The new showroom will enable our customers in Negombo to save time, effort and cost," he said.

Finco intends to expand its presence in every part of the country to better serve its customers, said Delgoda. The company will open its next sales outlet in Kurunegala and thereafter in Ampara. "In the meantime, we intend to introduce a new range of products to the portfolio, identifying customer needs and trends," he added.

Established in December 1983, the Engineering Sales Directorate of Finco Limited (Finco ESD) is the sole agent for a wide range of construction chemicals from BASF Construction Chemicals of Germany, waterproofing products from Xypex Chemical Corporation of Canada and bituminous products by Bitumat Co. Ltd., of Saudi Arabia.

Finco is the market leader in the supply of chemicals to the local construction industry. Finco also handles a wide range of geofabrics, manufactured by TenCate Geosynthetics, Holland, as well as woven mesh gabion boxes and mattresses, manufactured by Link Middle East Ltd.

Finco ESD also functions as a specialised contractor in the fields of hygienic and wear resistant industrial flooring, waterproofing, concrete repair and design and erection of earth retaining structures. Finco ESD was adjudged the best distributor in the Asian region for BASF construction chemicals in 2004, 2005 and 2007.

Currently, the company has a 70% per cent share of the market for concrete admixtures, 70% per cent of the waterproofing products market, 90 per cent of the market for structural grout and 80 per cent of the industrial flooring segment, a statement said.

Macksons Paint Industries (Pvt.) Ltd., manufacturers of Multilac paints, rewarded 140 of their outstanding dealers with a tour to Bangkok. The dealers were hosted at star class venues and treated to a fun-filled programme of culture and entertainment in Bangkok and Pattaya, which included a dinner cruise and city tour.

The dealers were unanimous in their appreciation of Macksons for sponsoring the enjoyable tour. "We enjoyed every minute of the tour. Macksons took a lot of time and trouble to make our stay a very memorable one. This is a really wonderful way of being appreciated for our hard work in making Multilac a household name in Sri Lanka," they said.

Today, Macksons Paints Lanka Pvt. Ltd, occupies a niche market as the provider of quality, customised paint solutions for a range of painting needs, having won several prestigious awards for quality and innovation over the past decade.

The company is a market leader in the colour bank segment and is also Sri Lanka’s largest paint exporter, exporting to well-established markets in India, the Maldives, China, Australia and Myanmar.

Asian property markets, though still relatively unaffected by the credit crunch, will soon be affected by inflation and higher interest rates, warns the Global Property Guide, because of rising food, fuel and other commodity prices.

"Higher food, fuel and other commodity prices affect the housing market negatively in several ways," says Prince Christian Cruz, senior economist at the Global Property Guide.

"At the micro level, households may postpone their decision to purchase a new house or spend on renovation if they anticipate higher prices. At the macro level, higher food and fuel prices push inflation up. Monetary authorities typically raise key interest rates to stem inflationary pressure," Cruz explains.

Asian households are particularly vulnerable to recent rises in food prices. The price of rice, the staple in Asian diet, has risen by more than 90% during the last year to March 2008, according the UN Food and Agriculture Organisation (FAO).

The price of other food also has increased significantly. Wheat was up 160% in March 2008 on a year earlier; soy bean oil by 104%, corn by 37%, and sugar by 26%.

Food prices are a key component in the Consumer Price Index (CPI). Their proportional weight ranges from 28% in Singapore, to 33.2% in China, to almost 50% for urban workers in India. High food prices will persist until 2009, according to reports by the FAO, World Bank and the International Rice Research Institute.

 The price of almost all commodities is increasing, not only food. The price of light sweet crude oil surged to US$ 145 a barrel in June.

Many Asian economies which have recently experienced residential real estate price surges such as China, Singapore, Philippines, Hong Kong and India (all of which registered double-digit house price increases in 2007) are under significant inflationary pressure.

Monetary authorities typically raise interest rates to combat inflation. They can also increase the cash reserve ratio (CRR) of banks or sell bonds or other financial instruments to reduce money supply.

The Reserve Bank of India (RBI) raised the cash reserve ratio by 50 basis points in two stages to mop excess liquidity and contain inflationary pressures. The CRR was 7.75% effective April 26 and 8% on May 10.

Fears of interest rate hikes cropped up in several Asian countries, particularly in Indonesia and China.

High interest rates affect housing markets in two ways:

1. By discouraging investment and consumption and causing the economy to slow, higher interest rates reduce people’s willingness to spend on housing

2. Higher interest rates discourage borrowing for housing loans.

"The situation is unfortunate because most Asian housing markets have not yet fully recovered from the effects of the 1997 Asian Financial Crisis," Cruz notes.

"Even with strong house price gains in 2007, property prices in Asia are still below their pre-Asian Crisis peak levels. Despite 31% nominal rise in the over-all residential property price index, Singapore’s prices are still about 10% to 20% below their pre-Asian crisis peak level in real terms," adds Cruz.

"In the Philippines, even with the 15% increase in condominium prices in 2007, it is still about 47% below its peak level in real terms," he continues.

The housing markets most likely to be affected by monetary tightening seem to be China, India, Singapore, Philippines and Thailand, which have experienced the largest increases in inflation.

"With global financial markets interconnected, the world’s economies tend to move together. The synchronicity was observed with the global housing boom — never before in recorded history did so many countries experience so much house price growth all at the same time," Cruz notes.

"The housing market slowdown may also be synchronised," he adds. "Inflationary pressures are likely to cause Asia’s central banks to raise interest rates, and slow their housing markets," he says.

However convergence will not be universal. Where currencies are pegged to the US, housing markets are likely to diverge somewhat from the global adjustment.

Countries such as Hong Kong and the Gulf must follow US interest rates. Unless those countries re-peg their currencies, their central banks cannot raise interest rates. This may lead to higher inflation including in the housing market.

International Construction Consortium (ICC) is one of Sri Lanka’s leading contractors with multi-capabilities in the construction industry. The award winning, ISO certified ICC has made a significant impact with yet another novel creation, the SBS floor system.

ICC is one of the pioneer companies to offer complementary assistance to the construction industry and their vast experience over the years have added to enhance this factor. ICC, which was established in 1980 is an ISO 9001-2000 certified construction company and has won the IFAWPCA gold medal for civil engineering and ICTAD Construction Excellence Award in 2002 and 2003.

ICC’s SBS floor system is a revolutionary alternative to in-situ concrete slabs. It translates in to a 30% cost saving solution on your steel shuttering and concrete costs compared to the conventional cost in situ method, achieving maximum profit out of minimum investment by constructing sturdy single beam floors (for housing) double beam floors (for shops and offices).

The SBS method is rapidly growing in demand and it is also an unique creation with multitude of advantages over the conventional cast in-situ technique.

The main features of SBS floors are;

· Rapid method of construction – utilisation of pre-cast elements and the non use of frame work

· A convenient method – does not require skilled labour for installation.

· This systems does not require prior knowledge of site conditions

· Residential slabs are normally designed to impose 150kg per square metre, but SBS slabs have an enhanced load up to 500kg per square metre.

Installation of the SBS floor system is very simple — just by placing SBS beams on walls, filling with masonry blocks, laying mesh reinforcement and topping with concrete screed. The pre-stressed slab system is made up of pre-stressed beams, concrete masonry soft blocks, distribution reinforcement GI weld mesh, and structural concrete topping.

Another problem in using normal in-situ concrete slabs is that it requires an enormous amount of bamboo props and plank where as SBS floors require no shuttering, is hassle-free, and a rapid method of construction.

The pre cast elements are manufactured using raw materials such as cement and sand which have been tested in their fully equipped laboratory prior to concrete mixing as it is difficult to test raw materials at a construction site.

ICC - SBS floors are cost effective, efficient and ensure top quality. It offers the best construction solution to the discerning builder.

Delmege Construction Products Pvt Ltd, a fully owned subsidiary of the Delmege Group, will boost sales of the range of Black & Decker Power Tools and Home Appliances currently marketed by the Company via an island wide distributor network of dealers for both the power tool range and the range of home appliances.

Black & Decker who are global manufacturers and marketers of quality power tools and accessories, hardware and home improvement products, have been represented in Sri Lanka by Delmege Forsyth since 1994.

"Over the years, Delmege together with Black & Decker have built up a reputation for quality and reliability", said Co-Deputy Chairman and Managing Director, Delmege Construction Products, Anil Wijesinghe.

The Black & Decker range of products and services are marketed in more than 100 countries, with the Company having manufacturing operations in eleven countries. Throughout Black & Decker’s businesses, they have established a reputation for product innovation, quality, end-user focus, design, and value. Their strong brand names and new product development capabilities enjoy worldwide recognition, and their global distribution is unsurpassed.

" It is the intention of Delmege Construction Products Pvt Ltd to establish Black & Decker’ as the preeminent global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology based fastening systems in Sri Lanka, and this coupled with the Delmege hallmark of quality and reliability will undoubtedly see the fruition of our objective", said Group Chief Executive Officer, Dilhan de Silva.

"The Industrial range from Black & Decker which is marketed under the brand name Dewalt contains industrial power tools, which are reputed for providing the guaranteed toughness that is required to perform under the most challenging conditions. The Dewalt range includes corded and cordless quality power tools for Woodworking, Manufacturing, Construction, Demolition and many other industries" said Floyd Nesarajah, General Manager.

He went on to say that "as a brand renowned for the toughness and quality of its professional power tools, the Dewalt brand also offers a wide range of high performance accessories. Professionals who use the Industrial grade tools require the highest level of performance in their trade and also expect a professional quality accessory to enhance the performance of their tools. Dewalt accessories are designed and developed to withstand even the most demanding conditions".

In total Delmege Construction Products Pvt Ltd markets more than 35 Black & Decker power tools and more than 75 Black & Decker home appliances, while the Dewalt industrial Power tools range contains more than 45 power tools in addition to the power tool accessory range which contains more than 250 categories catering to all the industries and needs.

"The Black & Decker brands are now household names with the proven brand Dewalt in the industrial sector and Delmege intends further consolidating their position in the local market" said Wijesinghe.

Pictured : Dilhan De Silva – Group CEO, Anil Wijesinghe - Joint Deputy Chairman / Managing Director, Shamil Mendis – Joint Deputy Chairman, and Floyd Nesarajah – General Manager, of Delmege Construction Products [Pvt] Ltd.