Galle: A blend of old and new

View of a lagoon near Galle Fort.

The charming town of Galle in Sri Lanka is attracting investors from around the world, thanks to the country’s strong economic growth, rapidly improving infrastructure and huge increase in tourist arrivals.

By Michelle Yee

Since the end of the civil war in mid-2009, Sri Lanka’s economy has been on a strong growth trajectory led by determined rebuilding measures, surging tourism and increased investor confidence.

“In a remarkably short period, the country has bounced back as a strong contender among tourist destinations in the Indian Ocean, and is on a steady tourism growth path. According to the Travel and Tourism Index 2015, Sri Lanka’s travel and tourism competitiveness jumped 18 ranks over the past four years, driven by the strong government focus on the tourism sector, remarkable infrastructure growth, and enhanced marketing and promotional efforts for the country as a whole. The country saw close to 1.8 million foreign tourist arrivals in 2015, having registered an average growth rate of 16 percent over the past five years, and exceeded the two million tourist arrival mark in 2016,” said a JLL report.

Tourism Minister John Amartunga said in a recent news article that the country is now working towards attracting 2.5 million tourists by the end of 2017. One of the main factors that contributed to the strong tourism growth is the rapidly improving infrastructure across the country.

“The road sector has been the primary focus area, with the US$3 billion Northern Expressway being the largest project in the pipeline. Work is also underway on Phase II and III of the Outer Circular Highway (OCH) – a ring road developed around Colombo and Phase III of the Southern Expressway across the popular south-west coast stretch, among other initiatives,” said JLL.

Galle, a major city located along the southwestern coast, has undergone a huge transformation over the past few years, and as a result, has attracted plenty of travellers.

“The region received a major boost to tourism following the completion of the Southern Expressway in late 2012, which enhanced connectivity from Colombo city to the region,” noted JLL.

The Southern Expressway not only reduced travelling time between Colombo and Galle to about two hours, down from three to four hours previously, but it also made the journey much more comfortable for travellers. Prior to the completion of the Southern Expressway, travellers who wanted to get to this historic port from Colombo had to commute via crowded trains or an even more crowded two-lane road.

Historical charm

As more travellers from all over the world discover this hidden gem, which is home to an astonishing array of ancient temples, towers and colonial buildings, many find themselves falling head over heels with this charming colonial town and are getting holiday homes there.

“We love Galle because it combines something of the charm of a Mediterranean, medieval town with the exotic, tropical landscape. The beaches are also absolutely stunning,” shared Hamish Macdonald, a British expatriate with properties in both Colombo and Galle.

Echoing similar sentiments, Steven Mayes, Managing Director at JLL Sri Lanka, said: “Galle is all about lifestyle, environment, heritage and ease of access. In addition, travelling time from Colombo has reduced dramatically since infrastructure improvements, and these positive changes have also opened up the region to new tranches of foreign investors attracted by the historic Galle Fort area, the town’s rich heritage, and the unspoiled beaches located to the south and east of the city, where absolute seafront real estate can still be acquired at relatively modest cost. This value for money legacy and associated attractive yields has not gone unnoticed, and demand is beginning to outstrip supply.”

As demand for property in Galle has increased, so have prices. “Prices have witnessed an average increase of around 20 percent over the past two years, due to demand driven by the peace dividend, aspirational lifestyle and the lifting of certain barriers to investment by government incentives,” Mayes said. Moving forward, with demand remaining strong, analysts expect prices to continue on an upward trend.

“Currently, demand is strongest for raw land plots, those with license to develop and those without, with seafront locations commanding the highest premiums, followed by inland plots that might have lakefront positions or attractive views. Demand is also strong for ready-built properties and those older colonial-style residences that need extensive remodelling and offer development potential. Prices can start from as low as US$120,000 for inland plots and rise towards US$6.5 million for prime seafront real estate with uninterrupted beach access. Transaction numbers are increasing and with demand outstripping supply, especially for prime property, prices continue to rise. Supply initially improved after the cessation of hostilities as owners capitalised on the increased demand, but supply has weakened recently as properties are snapped up and opportunistic owners are retaining real estate in the hope of increased future revenues,” Mayes added.

Aerial view of Galle city.

Why invest in Galle?

Strong economic growth

According to a JLL report, economic growth in Sri Lanka has been among the fastest in South Asia in recent years. “Economic growth was 7.4 percent in 2014, marginally higher than the previous year’s growth rate of 7.2 percent, while per capita income increased from US$2,400 to US$3,625 over the past five years and is projected to show a further increase in 2016 and beyond, which will then place Sri Lanka under the World Bank classification of an “upper middle-income country”. Growth in the past five years has been largely driven by reconstruction Aerial view of Galle city. efforts across the country – including infrastructure development and construction activity. However, in order to sustain these high growth levels, Sri Lanka will have to drive private sector development and foreign investment, focus on increasing exports to generate jobs and manage the country’s large fiscal deficit. Sri Lanka attracted foreign direct investment amounting to US$1.68 billion in 2014 – a 19 percent increase over 2013, but below the US$2 billion target set by the government.

“The country is now focused on long-term strategic and policy development changes to ensure long-term economic growth.”

A tourism hub

Easy on the pocket and with its gorgeous pearly white beaches and national parks, it is no wonder this major city in Sri Lanka is a huge draw for discerning travellers seeking the perfect blend of nature and great sights.

That is not all. Galle, with its rich history dating back some 450 years ago, is also rapidly gaining popularity among history and culture buffs. There are numerous archaeological sites, awe-inspiring architecture, as well as a collection of world-beating temples and museums, which allow travellers to delve deep into the country’s rich history and culture.

Whether you’re a nature lover, culture seeker or avid foodie, there is definitely something for you here. One of the must-visit attractions here is definitely the famous Galle Fort, a UNESCO World Heritage site, with large parts of its walls still intact today.

Galle set for more growth

Looking ahead, with major infrastructure improvements ongoing, an additional terminal at Bandaranaike International Airport in the pipeline, and port development in the works, Galle is expected to see continued strong market activity over the next few years, said experts.

“The government has implemented a Country Operations Business Plan (COBP) in conjunction with the Asian Development Bank (ADB), lines of credit have been introduced to support and encourage small to medium enterprises (SMEs), and financial initiatives have been introduced to support infrastructure improvements and develop the education sector. One target that looks likely to be achieved is 100 percent rural electrification by 2021.

“Port and airport development are also creating the potential for Sri Lanka to become a key transport and tourist / transit hub for Asia. The completion of the Hambantota Port and the Colombo Southport Expansion will increase the capacity to take advantage of the country’s strategic location on the major international shipping lanes, while development of an additional terminal at Bandaranaike International Airport in Colombo will see the airport capacity expand to 15 million from the current six million capacity,” Mayes said.

Where to look at

There are many drivers that impact investment decisions, but in real estate, everyone understands the importance of location. Galle Fort continues to witness the strongest demand for reasons of accessibility and high profile, while lifestyle factors are leading to increased demand for beachfront real estate.

Buying guide

“As in most developing countries, there are restrictions on foreign ownership of immovable assets such as land and property. However, with the advent of the new government under Maithripala Sirisena (President) and Ranil Wickremesinge (Prime Minister), and the subsequent budget, the previous 15 percent tax on buying leases has been removed, allowing foreigners to buy up to 99-year leases without tax. For foreigners wishing to buy freehold land outright, tax exemption is possible, but will be reviewed on a case-by-case basis,” noted Mayes.

CITY FAST FACTS
(GALLE)

Population: Approx. 100,000

Total area: 16.52 sq km

Currency: Sri Lankan Rupee

GDP per capita (Sri Lanka): US$4,000

GDP growth (Sri Lanka): 5.0 percent

Future transport: Expansion of the Southern Expressway

Distance from Singapore: 2,641 km

INTERNATIONAL HIGHLIGHTS

We’ve rounded up the most attractive properties in Galle, which are located close to shops, restaurants and unspoilt beaches.

PROPERTIES FOR SALE

Fairway Galle
Pinnaduawa, Galle, Sri Lanka

Type: Apartment complex
Developer: Fairway Holdings
Tenure: Freehold
Facilities: Swimming pools, gymnasium, clubhouse, tennis courts, squash courts, jogging tracks
Nearby Key Amenities: Museums, cafes, antique shops, beaches
Nearest Transport: Southern Expressway
Starting Price: Rs.15 million (S$141,139)

The latest development by Fairway Holdings, Fairway Galle, which is located in Pinnaduawa – on the exit road to Galle from the Southern Expressway, is the first-of-its-kind project outside of Colombo, broadening the diversity of apartments in Sri Lanka.

Thanks to its strategic location, getting to the city as well as other famous landmarks like the Galle Fort, will be a breeze. Slated to be completed by the first half of 2017, the development comprises a good mix of two- to three-bedroom apartments spread across two 12-storey buildings. Regardless of which unit buyers pick, they can be assured that each one has been carefully designed and outfitted with a range of modern furniture and appliances.

Residents will also stand to benefit from a bevy of recreational facilities, including swimming pools, a gymnasium, clubhouse and more.

Three-bedroom villa
Heenatigala, Galle, Sri Lanka

Type: Villa
Marketing agent: Pearl Sri Lanka
Tenure: Leasehold
Facilities: Guest house, kitchen, staff house, swimming pool
Nearby Key Amenities: Shops and restaurants in Galle city, beaches
Nearest Transport: Southern Expressway
Starting Price: US$650,000 (S$921,765)

Located in the Heenatigala neighbourhood in Galle, this beautiful colonial-style villa, which sits on a spacious 0.76ha plot of land, has been completely renovated and now consists of three bedrooms and a separate guest house comprising two bedrooms, a kitchen, a staff house and a swimming pool.

Whether you are planning to purchase this gorgeous villa as a holiday home or as an investment, this development, which is located in a peaceful village and a mere 15-minute drive away from Unawatuna, Talpe and Habaraduwa beaches, will make an ideal choice.

Inside the main house, one will instantly fall in love with the high ceilings, gorgeous pillared verandahs and beautiful archways combined with colonial-style interior design. Without a doubt, this property perfectly combines modernity and sophistication with heritage.

			This article was first published in the print version PropertyGuru News & Views. Download PDFs of full print issues or read more stories now!