Determinants of market value for high - rise condominium units in Sri Lanka :

Abstract

Real estate industry has shown significant boost in Sri Lanka since last few decades. Among that, residential real estate has emerged as most sensitive segment. Urbanization and land shortage increase with the time and then condominiums have become a good solution for that. Comparatively condominiums are the highest valued residential real estate solution. Later on, high-rise condominiums emerged as a solution for quality living style of high-income segment of the country as a high-quality residential solution, convenient living style and as an investment option. This concept has become a long-term business model along with the investment solution which incorporated with it. Therefore, couples of local and foreign developers started high-rise condominium projects mostly in central Colombo area in last few years because of steady demand. Apart from the demand, developers have to concentrate on other factors which influence customers to purchase high-rise condominium units in order to sustain in the business. Also, utilize those factors to convince customers to purchase and justify the value of condominium unit on sales and marketing point of view. This study was carried out to find those market value determinants from the developers’ perspective. Initially comprehensive literature was carried out. Then the factors identified from literature were discussed, verified and upgraded via expert interviews before finalizing the survey questionnaire to capture information. The expert interview was conducted with five experts in the industry who has hands on experience and knowledge in the multiple on-going high-rise condominium developments took place over the last three years, in Cololombo Sri Lanka. The questionnaire survey was conducted under six main factors and numerous sub factors with 5-point Likert scale; respondents were mainly sales team members of developers, valuers and agents who are involved in high-rise condominium sales and the survey was distributed among 50 respondents then the completed responses were obtained from 40 of them in the expected time line. Subsequently, after the completion of the data gathering process; collected information was recorded into the SPSS statistical software in a structured analyzable manner to conduct data analysis. Factors influencing the market value of high-rise condominiums were identified as location factor, physical factor, investment factor, subjective factor and market factor. All of those factors and sub factors show significantly high mean value. Then the correlation test was conducted to identify the key determinants for market value of high-rise condominiums in Sri Lanka. Therefore, it can be concluded that the investment factor is the highest correlated factor among all factors, then other factors which are highly correlated are in order can be stated as physical, subjective, market and location factors. Finally, it is recommended to identify customer’s real requirement and build the sales conversation based on the sequence of highest to lowest influencing factor. Developers to pay much more attention on design, service quality, risks, government long term policies, compliance and invest on training front line business development teams on customer service, recent laws and regulations.