Sri Lanka Overseas Realty expands amid a property market pick up
Apr 28, 2010 (LBO) - Sri Lankan developer Overseas Realty (Ceylon), a unit of Singapore's Shing Kwan group said it was starting an expansion of a property project amid a pick up in the property market.
Overseas Realty owns the twin tower World Trade Centre building in Sri Lanka's capital which houses the Colombo Stock Exchange.
It second major project, Havelock City, is on 18 acres of prime land in Colombo and is developed through Mireka Capital Land, a joint venture with state-owned Bank of Ceylon.
The firm has begun work on the second phase of the Havelock City mixed property project which includes a retail mall.
Chairman S P Tao said that sales of new apartments in the project and occupancy at its existing World Trade Center (WTC) building have begun to pick up after slumping last year owing to global recession and ethnic strife.
The company has invested in the foundation work and designs for Phase 2 of Havelock City and plans are being drawn up to proceed with the club house and commercial development, Tao told shareholders in the annual report.
Tao said in 2009, the first phase comprising two residential towers of 226 units, covered parking for 520 vehicles and about two acres of landscaped gardens was completed.
"Though sales were slow during the first half of the year, increased marketing effort commencing October and improved country sentiment resulted in higher sales of apartments in the fourth quarter."
Revenue recognized from apartment sales in 2009 was 1,234 million rupees, double that of the previous year.
The net profit contribution from Havelock City to the group profitability in the year was 106.5 million rupees, Tao said.
Although group revenue rose 34 percent to 1.9 billion in 2009, Tao said profit after tax excluding fair value gain fell 15 percent to 365.47 million rupees.
This was because of a decline in rental income at the World Trade Center and lower than anticipated apartment sales.
"As anticipated, average occupancy at WTC declined 19 percent year-on-year to 68 percent in 2009 (from 82 percent the year before), though an upward trend was witnessed in the fourth quarter," Tao said.
The island's real estate market slumped in 2009 because of amid a balance of payments crisis which pushed interest rates up and killed bank credit amid an intensifying internal conflict.
But the trend reversed towards the end of the year with the 30-year war ending in May 2009.
source - www.lbo.lk
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