Realtor beats Sri Lanka's prohibitive land taxes through leases

The real estate india firm dealt in the Sri Lankan property market is going to help foreign buyers, a 100 percent transaction tax by arrainging 99-year leases.

Lakshmi Narayanan CEO , Real Estae Bank of India(Lanka) Private Limited(REBI Lanka) said," They were raising funds abroad because of the high cost of finance here. the firm has set a target of doing 12,000 property transactions by March 2008 and wants to train 2,000 people by the year’s end to infuse more professionalism into the island’s property business."

He added "The high transaction tax discourages potential business in Sri Lanka for foreign investors in the property market.The only problem is that the government has laid a tax of 100 percent for foreign investors over property.”

The company is looking to implement an easy route its clients by leasing property for 99 years which will bring down the tax to seven percent.

Already foreign companies can buy companies, including listed firms that owned land, without paying the transaction tax.

A Malaysian construction firm bought dormant listed company, whose only substantial asset was a prime property in Colombo's up market Kollupitiya area, last week .

Apartments on high rises are also exempt from the tax.

The firm is planning to act as a one-stop-shop for both local and international clients handling brokerage, financial services, databank facilities accessible through electronic media, web, magazines and toll free call centres.

He also added,"They also plan to train people because the local market lacks trained professionals. Most people who do real estate in Sri Lanka are "small timers" and the business is not organized on professional lines .Sri Lankan real estate business at present is a time consuming business and there are no trained processionals."

He added“Looking at the potential deals with the state we plan to raise funds internationally since the interest rates in Sri Lanka are very high.”

The minister for construction and engineering services Rajitha Senaratne said," The government welcomes foreign investors so more construction projects can be initiated. I intend to build 100,000 houses before the 2008 elections and I believe that the private and the state sectors can work in collaboration"