Condominium developers are victims of ‘greed inflation’, industry says – Reuters

• Saying that developers have been unfairly targeted by building material suppliers with gigantic price increases
• Said that a new taxation of the condominium sector will bring it back to the ground; urge the government. with several layers of paratariffs on the industry
• Also calls for changing the perception that condominiums and apartments are “luxury developments”

Condominium developers are struggling to move their operations forward as they have become victims of “greed inflation,” said industry speakers.
The developers have alleged that they are being held hostage by suppliers of building materials, fittings, fixtures and even services to such an extent that the continuity of this vital sector of the economy is seriously threatened.

“What is most ironic is that some of the raw materials are made in Sri Lanka and others have a high degree of local added value and are therefore not affected by the exchange rate or rising prices. transportation costs.
Nevertheless, these also reflect and share the soaring inflation of finished goods imports,” the Condominium Developers Association of Sri Lanka (CDASL) said in a statement to the media.

He pointed out that many sectors of trade and commerce are experiencing this “greed inflation” where profits are “inflated” out of all proportion to an increase in costs.
While the US dollar has doubled against the Sri Lankan rupee, as have freight rates, which have increased by around 200%, the overall impact on CIF prices is considerably smaller, averaging around 10 % of FOB according to density.

“These increases in no way translate into unreasonable increases seen across a range of products,” the association said.
Floor tile prices were Rs. 150 sq ft in 2021 are today at Rs.450-600 and have a four month lead time with no price hold guarantee. Steel, which was Rs 110,000 per ton in 2021, is now Rs. 450,000, cement at Rs. 800 per bag is now 3,100 and fixtures and fittings regularly show an appreciation of over 500%.

To remedy the situation, the CDMA had proposed four solutions. The first is to recognize that new taxation such as the reimposition and increase of input VAT and social security tax are short-sighted, ineffective and ill-considered measures which will have the opposite effect of their objective.

The second is the rationalization of multiple layers of para tariffs, such as PAL, CESS, excise duty, etc.
The third is to review protectionist measures and review negative lists and restrictions that seriously undermine quality standards.
The fourth and final suggestion is to step up efforts to change the mentality that condominiums and apartments are “luxury developments” and are for the wealthy.
“Condominiums are the solution for cost-effective resource conservation and improving middle/lower class urban lifestyles nationwide,” CDASL said.

He also pointed out that the need of the hour is for the Ministry of Urban Development and all its satellite departments, the Ministry of Finance and the banking sector to adopt more of a supporting role than one of restriction and control.
The association also called on policy makers and relevant authorities to prioritize condominium developers as they can help revive the economy. Developers have expressed confidence in the condominium industry, with little effort, but subject to a favorable framework, generating up to $150 million or 20% of realistically achievable FDI.