Edition #11
November news
Issue number 2 in this new format. Do see below for new listings, good value options and other thoughts.
For any would-be villa investors, do see our notes on the Roark Group project fundraising for development in Hiriketiya.
Newly up for November
A uniquely conceived villa - teak inside and out - within a minute’s walk of two of the loveliest beaches in Sri Lanka.
This really is a one-off, a lovingly conceived and well looked after teak-built villa on an elevated former coconut plantation that looks down towards one of the sweetest (therefore aptly named*) beaches on Sri Lanka’s South Coast.
The house was built in 2004 and on a large enough piece of land to feel well secluded. This stretch of coastline, set a little away from the main road, has remained relatively untouched and still just a handful of villas dot the hillside above the beach.
Best value options
Bare land ideal for villa development in Heenatigala
3 acres
USD 365,000
This large piece of land is ideally suited for a significant villa development - either taking as whole for one grand house or splitting. It has great access, with three good entrances from good village roads, is split across three levels and is within 5 minutes of the beaches of Thalpe and Habaraduwa.
News and views
Bali-style - developers replicating the Indonesian island’s villa model
It’s been interesting in recent months to hear from villa developers looking to replicate in Sri Lanka the model of small multi-unit villa developments that has worked profitably in Bali.
The guys we’re speaking to are typically relatively small-scale private developers, some with experience and track records in property development, others trying their hand for the first time.
The model, in summary, is to develop, on small plots of land, private villas that, though not huge, have the eye-catching Instagram-appeal to command good occupancy and relatively high daily rates. Developers look for high traffic locations but consider plots priced attractively. Those plots may be discounted slightly given a location a little away - though still within walking distance - from the prime strips.
Typically, developers don’t concern themselves with views or worry too greatly about immediate neighbours. Their goal is to create a product that is self-contained - mostly two- to three-bedroom units with small pools - that markets well and sells on the merit of its own contemporary style and aesthetic.
They also look to technology, optimising presence on platforms like AirBnB with dynamic pricing and AI to maximise revenue and limit traditional overheads.
One developer that does have a proven record of developing successful hospitality projects is Marijn Bruins, a Dutch real estate and hospitality entrepreneur leading Roark Group based out of Dubai.
“We see in Sri Lanka right now an opportunity akin to what there was in Bali say 10-15 years ago. There’s a real and growing demand for high quality villa-style accommodation in prime locations but an acute lack of supply to meet it.
“In our existing hospitality operations we’ve leveraged new technologies to efficiently drive revenue and limit costs. We see that potential, paired with the fundamentals of the property and hospitality markets in Sri Lanka right now, as providing a really strong opportunity in this space.”
Roark Group is currently fundraising for a new villa development project in Hiriketiya. It is seeking investment from USD 72,500, targeting an IRR across a 5-year investment timeline of 18% and a stabilised cash yield of approx. 20%.
For more information do get in touch - max@thenewsrilankanhouse.com - +94 76 640 4373
Prime villa market heating up? Where’s the stock?
At the other end of the villa market to those described left, we’re happy to report things heating up.
We have learned not to count chickens (until the eggs are hatched!) - but in October took deposits on two villas priced, respectively, a little above and below USD 1.2m.
The buying market for these kind of properties is widening too. We’re now seeing good levels of enquiries from Sri Lankan buyers; those based here and, notably, those that have moved overseas but are looking to reinvest in the country.
The challenge, actually, seems to have flipped slightly from demand to supply. Immediately post-Covid we struggled for buyers, we now are lacking slightly in enough good options for those buyers flying in, or driving South, to view.
As said, there are multiple projects, it seems, for commercially-focused, small villa units. We’d love to see projects at the higher end that, perhaps, prioritise lifestyle (for owners and guests alike) as much as ROI.
Mawella renovation house
0.2 acres (32 perches)
Mawella
For sale - LKR 24.4m
(Ref - 131)
See the listing