Interview: Arun Pathak
How can attitudes towards vertical living be changed, and to what extent can vertical projects address urbanisation-related challenges?
ARUN PATHAK: One of the first things that needs to happen is for local communities to feel comfortable with the space, and look forward to all of the benefits associated with vertical projects. Pressure exists in Sri Lankan society, especially in Colombo, to adopt this new style of living, because the existing set-up is becoming more challenging: as people get older, maintaining all the services associated with large houses becomes tougher. We are therefore seeing a shift in preferences, with people becoming more willing to adapt to vertical living spaces that provide ample space and are more elegant, efficient, safe and secure. In addition, they offer more community-oriented living with better facilities, and are far more convenient to occupy and maintain.
In urban centres around the world people are gravitating towards vertical living to alleviate the pressures of urban life. Vertical living often takes place within integrated projects: your office, your leisure facilities and your home are all in the same vicinity, which largely obviates the need to commute.
As Colombo’s luxury market continues to develop, will demand be investor-driven or owner-driven, and what are the economic implications?
PATHAK: I believe demand will certainly be more owner-driven in the first few years; however, we will see a slight shift over the medium to long term, with investors coming in later, provided the economic status of the country remains stable and the outlook progressive. The urban luxury market in Colombo will not be driven by short-term residences. I believe the strength of the longer-term occupancy segment, reflecting the country’s overall success in attracting investment with the goal of building a robust economic future, will drive growth in upcoming years.
With rising commodity prices and the further depreciation of the Sri Lankan rupee, how is the industry adapting to higher development costs?
PATHAK: There is both a positive and a negative side to the depreciation of the rupee. While it has increased local costs, it has also kept local businesses and industries competitive from the perspective of international trade. However, since the rupee has depreciated so much, the market size is potentially in danger of decreasing substantially over time. Rising commodity prices and depreciation of the currency will have less impact on the highend segment than on larger projects in the low to medium tier, which will face challenges if the trend continues. One possible outcome of this situation is that these costs will eventually be passed on to the consumer, but this depends on the strength of the market. This means that those developers whose capital was not raised from debt, and who can wait until there is increased economic stability and growth, will certainly have more to gain; those developers who cannot will have a tougher time.
What is the potential for mixed-use developments in and around Colombo?
PATHAK: The overall potential is high, due to a vacuum following on from a very long period of low investment. In the last few years Colombo has started developing again. If the country grows economically, the majority of this growth will initially be focused on the capital.
A robust and appreciating real estate market in and around prime business and residential areas is a key driver of inner city redevelopment and urban renewal. Indeed, many cities have benefitted from this global trend recently. Considering the pressures on traffic and civic amenities, mixed-used developments are the best solution, because they relieve such complications within congested urban centres.
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