Financial Times

Equity Two Limited, a Carson Cumberbatch property company, is actively looking to change its business model from a ‘build and rent’ to a ‘build and sell’ preposition and construct upmarket high rises and stand alone housing units, according to market analysts.

“The company is planning to buy land in the outskirts of Colombo and they are looking at lands which are in and around the proposed circular highway route to the Colombo city to build apartments and houses,” an industry analyst said.
He said that when the highways come in, it will be a lucrative option to build condominiums and houses, because the time to get to the city will be shorter, while the residents will be away from noisy urban areas.

“When the highways come, it will be quicker to get to the city from the outskirts of Colombo while the residents can also live a healthy life style in the suburbs,” he said adding that at the same time, building commercial buildings and renting them is not a good return in investment options compared to the apartment and housing business.

“The returns on apartment and housing construction are much greater than leasing commercial buildings,” he said.

Meanwhile Chandima Gunawardena, Chairman, Equity Two Limited in the annual report statement said that owning a building in the prime financial and business district of Colombo is negative due to the high security zoning of the area.

“Due to this limitation the company’s ability to change market rental rates is affected. The major problem is the restriction of the movement of traffic and people in and out of the area.

Due to this, potential tenants are less likely to occupy the building. The full potential of the building will be seen once the area opens up and frees traffic movement,” he has stated.

The company posted a net loss of Rs. 2.97 million in the last financial year against a loss of Rs.0.19 million the previous year.

The turnover was down to Rs.12.36 million from Rs.13.42 million. “The main reason for the reduction in turnover and profit was the departure of two tenants, with replacement tenants being found only after the lapse of a few months towards the last quarter of the year. Hence, the performance in the last quarter of the year is better than for the same period of the previous year. The average occupancy levels were at 70 percent as compared to 84 percent in the previous year,” Gunawardena said.