PROJECT. 600 Apartments At Vauxhall Street

Size: px

Start display at page:

Download "PROJECT. 600 Apartments At Vauxhall Street"

Gwendolyn Malone
5 years ago
Views:

1 MIXE PROJECT 600 Apartments At Vauxhall Street EVELOPMENT To#develop#37#story#with#600#luxury#apartments#on#253#perches#land#adjacent#to#Vauxhall# Street# #home#to# Big#Businesses #and#shores#of#the#beira#lake#g#vauxhall#street#is# surrounded#by#leading#commercial,##buildings#,#modern## 1

2 !! Sector# Infrastructure/Mixed#Development# ResponsibleAgent(s) Investor,BOI,UDAandotherLineMinistry/Agency ProjectDescription 37storywith600luxuryapartmentsormixeddevelopment ProjectSize US$160Mn TotalExtentoflandareais253perches Proposed Investment#Model# # ProcurementProcess # (a) ForeignDirectInvestment (b) Jointventureagreementwithpotentialinvestors/developers Project Documentation CurrentStatus ExistingPolicy, institutional frameworkand concessionstobe offered (1.)ProjectapprovalreceivedfromBOIformixeddevelopment (2)Governmentlandleaseagreementfor99years (3)Cabinetapprovalforthisprojectformixeddevelopment. (4)UDA(urbandevelopmentauthority)clearancesforsite/buildingapprovals areobtained (5)TheprojectqualifiesforallapplicableincentivesundertheBoardof InvestmentofSriLanka(BOI). (6)SCAKAapprovalobtains.(SpecialgovernmentsubcommitteeforColombo citydevelopment) Investor/Developercouldcontactthelocalinvestorforfurtherdetails regardingtheproposedproject (01)BoardofInvestmentofSriLankahasgranted12yearstaxholidays (02) Withthistaxperiodanyprofitgainfromthisprojectnotaxes (03) Otherrelevanttaxesinsrilankaalsotaxfree(BBT,STAMP,ECT) (04) Dutyfreefacilitiesforimportationofprojectrelateditemsunderthe BOIincentivescheme. (05) Dutyfreefordevelopertobringprojectrelatedhisequipmentsand machinery (06) Allowforvisaskilllaborfromforeigncountries (07) 12yearstaxholidaystaringfromprojectcontractionstartingdate. (08) Withthisschemeinvestorcanopenforeigncurrencybankaccountin srilankaandbringtheyfundandtakebackhomewithoutcentralbank control 2

3 PROJECT#PROPOSAL#FOR## MIXED#DEVEVELOPMENT#PROJECT#IN#VAUXHALL#STREET# Sri#Lanka# #Country#Situation# The cessation of hostilities in May 2009 has placed the country on a platform of a massive unprecedenteddevelopmentdrivetocatchupwiththebacklogandlostopportunitiesduringtheethnic warlasting26years.foreigndirectinvestments(fdis)havepouredinfromseveralregionalcountries suchaschina,hongkong,singapore,southkorea,indiaandmalaysiaaswellasfromthetraditional countriesinthewesttoalesserdegree.infacttheinvestmentsinthefirst09monthsof2013have amounted to USD 870mn while commercial loans have totaled USD 1.32billion in the period.the governmentaimstomakesrilankathecenteroftheasiansilkrouteonceagaintakingadvantageofits unique geographical location. Its target is to make the country into navigation, aviation, financial, tradingandcommercialhublinkingtheeastandwest.thedevelopmentprojectshaveinitiallybeing focused on infrastructure covering sea ports, air ports, expressways and roadways, hotels, shopping mallsandothercommercialbuildings,apartmentsandmixeddevelopments.severalsectorshavebeen targeted by big names in the world of business attracted by real business opportunities, boosted by attractive incentives offered by the government of Sri Lanka by way of special tax holidays, customs dutiesandotherwaivers,exchangecontrolexemptionsandfasttrackapprovals. PleaseseeAnnex01foranOverviewoftheSriLankanEconomy. Construction#Industry#Overview Sustaining the high growth momentum recorded during the 2011 year, the construction sub sector recorded an impressive growth of 21.6 % compared to 14.2% in This is the highest growth registeredbythesubsectorinthepast10years.thesubsectorcontributedto8.1%oftheoverallgdp and23.9%ofthechangeingdpgrowthfrom2011to2012becomingthegrowthdrivingsubsectorin theindustrysector.comparedtotheshareof6.6%andcontributiontothechangeof10.3%in2009, thisindicatestheimprovedperformanceofthissubsectoraftertheendingofthewar.publicsector construction projects, particularly in the areas of infrastructure development projects such as road development, power projects, port and airport development and housing development projects providedasubstantialimpetustothegrowthinthesector.theprivatesectorcontributedtowardsthe growthinthesubsectorparticularlywithhotelandhousingconstructionactivities.thegrowthinthe subsectorisreflectedthroughtheincreaseinimportsofinvestmentgoodsandbuildingmaterialsby 1.7%and13.5%involumetermsin2012.Furthermore,loansandadvancesbytheCommercialBanksto theprivatesectorforconstructionactivitiesgrewby22.9%in2012,comparedto14.5%in2011.asper thepriceindexcompiledbytheinstituteofconstructiontraininganddevelopment(ictad),thecostof constructionactivitieshadincreasedby12.2%duringtheyearcomparedtotheincreaseof5.4%in201 3

Development#of#Colombo Colombo the Commercial Capital of the country for centuries is experiencing new lease of life in the developmentperspective.

Colombo is also fast emerging as the financial hub of the Region with a highly developed banking system,exchangeliberalizationandfurtheropeningupofthecapitalaccountofthecountryinaddition

greeningofthecityanditsimmediateenvironshascontributed to beautifying the City. According to the government plans the City would compare with the besta developedcitiesinasiainthenearfuture.

The Nations construction industry as a whole has been on a rapid drive forward in its post war era heraldingsrilankaintoanewageofmoderncitiesand21 st centurylifestyles.

4 Development#of#Colombo Colombo the Commercial Capital of the country for centuries is experiencing new lease of life in the developmentperspective.colomboportakeyashippinghuboftheregionhasalreadycarriedoutthe Colombo#South#Port#expansiontocaterforhighervolumeofTEU saswellastoaccommodatedeep draughtvesselsandtransshipments. Colombo is also fast emerging as the financial hub of the Region with a highly developed banking system,exchangeliberalizationandfurtheropeningupofthecapitalaccountofthecountryinaddition tothemostderegulatedcurrentaccountofthecountryinthesouthasianregion. Infrastructure development by way of modern roadways and highatech communications has given a furtherfilliptothedevelopmenteffort.greeningofthecityanditsimmediateenvironshascontributed to beautifying the City. According to the government plans the City would compare with the besta developedcitiesinasiainthenearfuture.recentyearshaveseencitylivinginsrilankatransform itself into a modern metropolis, almost befitting of its western counterparts in terms of amenities, conveniencesandlifestyleservices. The Nations construction industry as a whole has been on a rapid drive forward in its post war era heraldingsrilankaintoanewageofmoderncitiesand21 st centurylifestyles.discerninghomeowners looking for luxury home investments in the City are becoming more selective in their choice of apartments, looking for dynamic solutions including solid construction, aesthetics value, intelligent architecture and engineering, access to modern conveniences, recreation facilities, minimal maintenanceandmostimportantlyanidyllicenvironmentinwhichtomaketheirhome. 4

5 In the last couple of years, Colombo has experienced the commencement of several high rise development projects in the residential apartment and mixed development categories. These developmentsaremainlylocatedatundevelopedlandsintheheartofthecityownedbythestateand madeavailabletopropertydevelopersonlongatermlease. Allthesedevelopmentsaretargetedatthehighaendofthemarketbothinrespectofcommercialspace as well as Residential Apartments. Even the Apartment Complexes being constructed by local developersareintheluxuryandsuperaluxurysegmentscateringtotheneedsoftheaffluentclassasthe richarebecomingricher. Location The land for the proposed Project, 253 perches in extent is located in Vauxhall# Street, Union# Place, Colombo#02, within the CentralBusinessDistrict(CBD)oftheCapitalandindeedofthecountryasa whole. Fort, Colombo 01 that has been the nerve center of business for centuries is a very small geographicalareaburstinginitsseamswithsaturation.colombo02,whichisadjoiningthefort,hasfor severaldecadesbeenthehuboflargemercantilefirms,particularlythevauxhall#street.however,the developmentofcolombo02hasbeenconstrainedforseveraldecadesinspiteofitsverycloseproximity tocolombo01,duetothefactthatthestateisthelargestlandownerinthelocalityandtheareahas experienced a proliferation of contiguous tenement structures and shanties most of which are illegal andunauthorized.theurbandevelopmentauthority(uda)andthedefenseministry(underwhichit falls)havemappedoutdevelopmentplanandstrategyforcolombo02whichenvisionsthefollowing: 1. Makingavailableundeveloped/underdevelopedstatelandtotheprivatesectoronlongatermlease fordevelopmentintoprioritysectors. 2. Demolitionandrelocationoftenementsandshantiesandunauthorizedstructuresinthearea. 3. Development of infrastructure including arterial roadways, communications, the Beira Lake, walkwaysetc. The area boasts of several higharise buildings including Empire Residencies, Dawson Towers, Hilton Residencies,onthreetwentyApartments,AccessTowers,AitkenSpenceBuilding,DialogAxiataBuilding, ParkStreetDevelopmentbyReadywearIndustries(Pvt)Ltd.,andmanymore.TheNawamMawatha area(alsofrontingthebeiralake)hasemergedasthefinancialcityincolombo02.severalproposed largescalemixedusedevelopmentssuchasdestinymallandresidencies themixeddevelopmentof UDA with Indian Giant TATA and the country s leading conglomerate John Keells Group s proposed Leisuredevelopmentareallwithin01KmofthesiteintheCBD. The#Site 5

6 ThemostimportantfactorinarealestatedevelopmentProjectisthelocationandsite.Thisparticular siteinthemercantilehubofcolombo02invauxhallstreethasacommandingstrategicimportancein thatitissandwichedbetweenthewellorganizedvauxhallstreetandthebanksofthebeiralake(wide frontage). The Beira Lake now serving as a pivot of development also serves as a nerve centre for leisureactivitiesincludingbeingthepremierwaterwayforrowing.theothersideofthebeiralakeis theplannedareaforhospitalityandleisureincludingtheupmarket integratedsuperluxuryresort of AustralianCasinoMogulJamesPackerandseveralotherrecreationandleisuredevelopments.The350 ft.talltransmissiontowerstyled NelumKuluna (LotusTower)isalreadycomingupfastacrosstheLake from the Site. This tower is touted to beapremiertouristattraction(bothforeignandlocal)andis boundtotriggertremendousactivity. Project# Conceptromoters have designed the project concept taking into cognizance the country situation with tremendous growth prospects, real estate industry trends, the strategic and supreme locationofthesiteintheheartofthecbdandthemercantilehubincolombo02withdualfrontageto thewellorganizedvauxhallstreetandthepremiermainwaterbodyinthecity,thebeiralake.due 6

7 considerationhasbeengiventotheneedtomaximizethebusinessopportunityofthesiteintandem withtheboominghighgradecondominiummarketparticularlywiththesuperluxurysegmentandthe demandforcommercialspaceinthishistoricalmercantilehubadjoiningthecitycenterfort. InviewoftheforegoingthePromotershavefocusedonthesuperluxuryapartmentmarketinthemain while taking advantage of the valuable commercial area by planning for a smaller component of commercialspace.accordingtopreliminarydrawings600apartmentsofthehighestgradearetargeted withafewfloorsofcommercialspacepenciledin. Market#Overview# Market!Definition!and!Opportunity! RecentyearshaveseencitylivinginSriLankatransformitselfintoamodernmetropolisalmostbefitting ofitswesterncounterpartsintermsofamenities,convenienceandlifestyleservices. The nations construction industry as a whole has been on a rapid guide forward in its post war era, heraldingsrilankaintoanewageofmoderncitiesand21 st centurylifestyles.discerninghomeowners looking for luxury home investments in the city are becoming more selective in their choice of apartments looking for dynamic solutions including solid construction, aesthetic value, intelligent architecture and engineering, access to ultra modern conveniences, high class recreational facilities, minimalmaintenanceandmostimportantlyanidyllicenvironmentinwhichtomaketheirhome. Inordertoretainthebeautyofthisnaturalenvironment,itisimportantthatdevelopersofresidential andcommercialpropertiesareconsciousofnotdisturbingthenaturalecosystemandensuringthatthe requireddevelopmentsleavebehindthesmallestof carbonfootprints. Theonlywaytoachievethiseffectivelyinhighdemandresidentialareas istobuild vertically.asa result, one of the key benefits of higharise developments is its minimal impact on the environment, doingmuchlessdamagetoitthanifalargenumberofhomeswerebuiltontheground. Colombo02whichisadjoiningtheFort,Colombo01,consideredtheCitycentre,isthetargetofarapid drive spearheaded by the Urban Development Authority (UDA) under the direction of the Defense Secretary, Hon. Gotabaya Rajapakse in the transformation of a congested area proliferated by old tenementbuildingsmainlyonstatelandintoamoderncentral#business#districtoptimizingitsvalue. Thesitewithanextentof253percheswithlongdualfrontagetoVauxhallStreetandtheBeiraLakeina serene environment is an ideal opportunity for reputed Architects to design a condominium developmentaimingatthemarketsegmentsindemand.!! 7

8 Competition!and!Other!Influences! Inthelast03decadesactivityintheconstructionindustryhasseenhighsandlowsintandemwiththe economicandsocialconditionsofthecountry.ofcoursewiththe26yearswarsituationconstructionof housingunitshaslaggedfarbehindtheeverincreasingdemandforhousing.recentsurveysconducted indicate that Sri Lanka has a shortfall of residential units amounting to over 600,000. Even with accelerated housing construction, demand for houses will outstrip supply in the foreseeable future considering the annual increment in demand.the dramatic rise in the price of land in Colombo has naturally led to the construction of higharise condominiums. The demand for apartment living in an aroundthecentralbusinessdistrictisfurtherenhancedbytheneedtobeclosetotheplaceofwork andtotheprestigiousschoolsobviatingstrenuoustravel.thedevelopmentsthathavesprungupand areonthedrawingboardsofcolombo02areaclearsignofthistrendandduetothehighcostofland anditsstrategicvaluethedemandisreallyfromtheaffluentclassesandexpatriates. Please see Annex 02 for a comparative analysis of super luxury apartments under development/proposedincolombo# whichshowsataglancethecompetitivelocations.ofthesethe mostrelevanttoourlocationisthejohnkeellsgroupdevelopmenton#three#twentywhichisabout600 metersfromoursite.itisnoteworthythatoutofthe475unitsonofferalready415havebeensoldwith thecompletionscheduledforendof2014.ofcourseonehastobearinmindthatthedeveloperisa companywithintheumbrellaofjohnkeellsholdinggroup,theno.1plcinthecountry. Unique!Selling!Proposition#(USP) Forthesuccessofanycondominiumdevelopment,thelocationisthemostimportantsinglefactor.Itis verymuchsointhisprojectaswell.infact,theuniquelocationwithcovetedfrontagetothebeiralake givesitauspwhichisnotavailabletothe on#three#twenty project.thebeiralakeitselfisundergoing a plan for a massive redevelopment with better facilities for rowing, other water sports, pleasure cruises,alinearparkwithawalkwayandthebanksoftheriverbeingallowedforhospitalityandleisure industryandmostimportantlytheunique Lotus#Tower. Target#Market In view of the foregoing the target market for the proposed residential development should be the super#luxury segmentofapartmentsectorandnothingless.althoughthereareotherlocationsin Colombo02aimingatthissegment,stillthereisscopeiftherequiredluxuriesandfacilitiesaremade availableandproperpositioningoftheprojectwithdueadvantagetakenofthebeiralakefrontageas wellasbeinginthehubofthebusinessdistrict.thelastfactormakesthesiteveryattractiveforsale/ leaseofcommercialspaceaswell.vauxhallstreetisauniqueareaidentifiedwiththemercantilesector withtheteatradeandinsurancedominating. # # 8

9 Marketing#Strategy# While the developer would naturally endeavour to obtain the highest value of sales, one would also have to strike a balance with profitability as well, and in that respect the following factors would be takenintoaccount.! Fixingofsellingpricesathigherlevelsduringtheconstructionperiodmakesitdifficulttoachieve presales of apartments and the discounts offered should be progressively less as the building constructionprogresses.reductionsofpriceshavefarmoreadverseeffectsthanincreaseofprices withregardtocustomersatisfaction.! Offerofundulyhighdiscountsonthelistpricestoattractfundsfromcustomersinordertocover project financing needs, erode project profitability. Presales proceeds take away the burden of shareholderstomakelargerequitycontributionsandtheneedforbridgingfinancefrombanks.it would beprudenttoobtainbankfacilitiestocomplementequityfundingandtodelaypresaleof apartmentsandrefrainfromofferofundulylargediscounts.! Potentialcustomersreadilymakebookingswhenconstructionofthesuperstructurehasreached.! Thepricesofapartmentscouldprogressivelyandsignificantlybeincreasedforhigherfloor levels particularlyduetotheimportanceof viewfactor andlessnoise,dustetc.! Presaleshavetheadvantagetothedeveloperasasourceoffinancefortheconstructionaswellas thecomfortthattheproductcanbesold.! Customizationneedsaremostimportantanditisbettertohaveawiderrangeoftheapartmentsof differentsizestofacilitatecustomerselection. Needless to say that the marketing strategy should also be determined by the imperatives of the developertakingintoaccountthedifferentcomponentofhisproposedfinancingplanandprofitability objectives. Sales#Forecast Undoubtedly the sales forecast of this proposed development would be a very vital factor in the decisionmakingprocessofapotentialinvestor/developer.indeterminingthevalueofsaleswehave to take into cognizance the comparative locations, which are really the on# three# twenty Project and DestinyMall,bothofwhichareinthesamelocality.TheJohnKeellsprojecthasapricerangeofUSD 192persq.ft.toUSD262withanaverageofUSD227.Ofcourseonehastobearinmindthat87%has already being presold and completion is scheduled for end In the case of Destiny Mall 55% is claimedtohavebeenpresold(thisfigureappearstobeoverestimated)andthecompletiondateismid 2017.ThepricerangeforDestinyMallisUSD199persq.ft.toUSD274withanaverageofUSD237 leavingoutthevillatypes(penthouses). TakingintoaccounttheabovepricerangeswecouldestimateanaveragepricelevelofwelloverUSD 260persq.ft.(exceptingPentHouses)assumingthattheconstructionstartsbyend2014.However,as ameasureofprudencywehavetakenaveragesellingpriceofusd260persq.ft.theparkingslotscan besoldoutrightatleastfortheresidentialapartmentsandwehaveincludedsuchsalesinthe 9

10 Comments#on#Configuration#! Asperthepreliminarydrawingsandspecifications,thetotalnumberofapartmentsamountto 600 Units + 04 Pent Houses. On this basis average floor area of an apartment works out to 1,055sq.ft.Weareoftheviewthat600apartmentsinonelocationwouldbetoounwieldyby wayofmanagementandmaintenance,parkingareas,nottomentionmarketingandsales,while anaveragefloorareaof1,055sq.ft.isonthelowsidetakingintocognizancethatourtarget marketisthesuperluxurysegment.assuchwerecommendthatthenumberofapartmentsbe broughtdownto498unitswhichwouldmeanthattheaveragefloorareaofanunitwillgoup to 1,271 sq. ft. which is a better selling proposition. Needless to say that 04 bed roomed apartments would have a much higher floor area while studio apartments and 02 bedroom apartmentswouldhavealowerfloorarea.! Thiswouldmeanthattheparkingslotsrequiredwouldbeproportionatelylesswhichwouldgive theoptionsofprovidingreducedparkingarea/allowingmoreslotsfromamarketingpointof view.! Asperthepresentplansonly04PentHouseshavebeenpenciledin.IntheSriLankancontextof thecondominiumsectorpenthousesconstitutethefirst#salesinaprojectduetothedemand forthembyhighnetworthindividuals.penthousesarealsotheunitsthatgiveadeveloperby farthehighestratepersq.ft.onsaleandaddsuperprofits.werecommendthatthenumberof PentHousesbeincreasedtoatleast06Units.ThiswouldbringthetotalnumberofUnitsto 502. Project#Cost TheProjectCostwouldinclude03basiccomponents,landcost,buildingcostandoverheadcost. Land! Asthelandinquestionisownedbythestateitwouldbedivestedonthepresentgovernmentpolicy, whichwillbeonthebasisofa99ayearleasebutwithitsvaluebeingpaidupfront.forthepurposeof projectcosting,thelandcostwouldincludetheupfrontpayment,legalfees,stampduty,negotiation fees,approvalcostoftherelevantlinedepartmentsforthedivesture,tenantrelocationcost,investor promotionfeeetc. Building!Cost! The building cost would include construction cost, consultancy cost and contingencies. The cost of construction would depend on several factors including the method of selection of the main constructor,themodeofthecontract(designandbuild/measureandpay/partneringetc.)andthe class of contractor (M1, M2 etc.). The cost of construction per sq. ft. would also depend on the conditionofthesoil,needforpiling,watertable,thenumberoflevels,procurementsystemofbuilding materials, availability of customs duty waivers etc. This Project already has Board of Investment approval with exemption from Import duty and other levies, which would bring down the cost of importingprojectrelatedgoods.takingintoconsiderationtheabove,anaveragecostofconstruction persq.ft.isestimatedatusd

11 11

Liverpool Buy-to-Let Apartments. Liverpool Buy-to-Let Apartments

Liverpool Buy-to-Let Apartments Investment highlights: 7% NET rental return assured for 3 years 20% early investor discount Luxury studio, 1 and 2 bedroom apartments Sold on a 250-year leasehold Established