Are buyers ready to plunk cash on vacation homes?

A country club developer is targeting Sri Lankans overseas interested in a second home and diversifying real estate portfolios

Vacation homes in a rural, country club setting attract interest from wealthy people living in cities and other countries. “Typically, those who have a property that’s part of a country club already own other properties. In fact, they are looking for ways to spend their time more meaningfully, to live better and healthier, while diversifying their real estate portfolio,” says Jeevan William, managing director of Granite Capital, the company constructing Catalina, the island’s first-ever residential country club.

Twenty one single-storey villas are being constructed on six acres at Koggala, a laid-back resort town where a lagoon is the main draw. Each villa sits on 20 perches and costs US$ 312,000 or Rs50 million upwards. Construction is expected to be completed by end 2019 but could vary depending on how fast the homes are sold. The development’s investors are funding construction of the project that includes a small golf course, tennis courts, clubhouse and a restaurant. “Residential country clubs have facilities similar to those at condos. This is a hybrid that is rare to find anywhere else,” notes William.

Residents will probably visit the villa during weekends or holidays, so it can be let out the rest of the time to generate some rental income.

“The average rental for a 2-bedroom villa in the surrounding neighbourhood during a non-peak season is around US$875 a week. It can be 2.5 times higher during peak months, bringing in a yield of 6.5 – 7.5%”, says William.

Country clubs have been popular in middle income Asian countries like Malaysia, Thailand and Indonesia for the last 25 years or so. “Sri Lanka has been underrepresented in the past,” says CharlesPhillpot, th e sales and marketing director at Sotheby’s International Realty which will market the project. Three of the 21 villas have been reserved by Sri Lankans residing overseas. “Successful professionals with established careers, in their mid to late forties and upwards have the wealth to contemplate this type of investment. However, liberalising regulations by providing resident visas, etc., will increase foreign direct investments into the country,” concludes William.