In frontier markets, like Sri Lanka, investing in homes, and real estate generally is a good bet. Real estate is a hedge against inflation and a safe and convenient way for intergenerational wealth transfer. Homeownership is high in Sri Lanka, so when the value of real estate rises, it improves the financial options families will have in the future. Homes are the single largest asset class in any country, and, in Sri Lanka, their returns have boomed for nearly two decades. But now the economy is in recession. Will real-estate continue to be the haven it has been in the past? For those who have allocated part of their savings to real estate, should an economic downturn signal the need to re-evaluate the strategy? Echelon hosted a live discussion on the outlook for real estate and its allocation in a portfolio.

The discussants included Chandaka de Soysa, Founder and Chief Executive of real estate agency Acquest, Nayana Mawilmada, Sector Head, John Keells Properties and Executive Vice President, John Keells Holdings, and Naveen Gunawardane, Managing Director and Co-founder, Lynear Wealth Management. Echelon’s Chief Editor, Shamindra Kulamannage moderated the discussion.

How does a real estate services company like Acquest maintain its relevance in an era when buyers and sellers can find themselves online?

Chandaka: For us, this is important. Over the last couple of years, we have focussed on deploying as much technology as possible. And in the next two to three months, we will launch platforms that will help us to put out extensive inventory options, and data about the market to enable informed decision-making, not just for home buyers and investors, but also for developer banks. We also want to reach a much wider audience using things like virtual and 3D walkthroughs.

There is more transparency around price discovery and a lot of other market information. We want to enable efficient real-estate decision-making, which we do not see now. There is a lot of waste and, sometimes, oversupply, and the wrong products built. So, we want to have an impact on how the real estate market adopts responsible data-driven decision making.

The John Keells Group is in many businesses with recurring, regular cash flows. How does property fit in when it comes to managing cash flows?

Nayana: Property is vastly different from the other six verticals in the group. We are the largest real estate developer in Sri Lanka. We have got into multiple segments where we are parallel processing, which allows some smoothness to the cash flows too. We have three big projects in the market right now — Cinnamon Life, TRI-ZEN and Victoria Golf and Country Resort. We have more developments in the pipeline, which should allow us a much steadier kind of run. So, we are taking an aggressive view of the property market, and our decisions are well informed and based on deep analysis of data.

Can you explain to us what Lynear Wealth Management does?

Naveen: Lynear is a wealth management firm we started over seven years ago. The business has two segments: one is an institutional asset management business where we manage the Sri Lankan investments, which is mainly equities and fixed income for institutions, both local and foreign. The second part is our multi-family office, where we work with ultra-high net worth families. Here, we go beyond traditional fund management. We are quite media-shy, but we are one of the largest players in the equity market at the moment.

What is your outlook for the economy and the impact on real estate?

Naveen: These have been challenging few months for the economy, and the outlook is a bit of a mixed bag. Take the global economy: the World Bank expects a 5.2% contraction. Within that, you have countries like China, which went into the crisis quite early, had strict lockdown measures in place and seems to have bounced back quite strongly as well. China had a 4.9% expansion in the third quarter, and it is tracking to about 2.7% in the first three quarters. Then you have the U.S economy with a 32% contraction in the second quarter.

One could argue that the U.S. economy was perhaps beginning to slow down before COVID struck, and the pandemic is only making matters worse.

In Sri Lanka, if you cast your minds back to January and February, we had quite a bit of stimulus in the form of massive tax breaks. And when we talked about the consumer space, many retail companies were seeing year-on-year growth in terms of volume earlier in the year. So, you could argue that the Sri Lankan economy was perhaps on the cusp of an expansion. When the lockdown came into effect, the economy just paused. Which is why when the lockdown restrictions lifted, we saw a faster-than-anticipated recovery in economic activity.

Consumer spending recovered to post-COVID levels. Nielsen data showed year-on-year growth in June, which perhaps had some pent-up demand. But certainly, the July numbers were tracking close to the levels seen the previous year. It is not surprising! We have quirks in our labour market: 27% of our labour force is in agriculture, which is at the mercy of the weather. So, you could argue that this group was not severely impacted by COVID. There is also about 15% of the workforce in the government sector, which did not have any salary cuts. So, in a sense, and perhaps not so surprising, the economic recovery started much faster, helped by a much faster-than-anticipated recovery in exports as well.

Now, if you look at what central banks globally have done in response to COVID, they went through a period of massive monetary and quantitative easing. And that has done two things. One, it has brought interest rates down. If you look at Sri Lanka, the one-year T-bill, which was at 8.45% at the beginning of the year, is now at 4.99%. At the same time, the central bank printed money to inject liquidity into the system. What that has done, in effect, is cause a rally in risk assets. So, if you take equities as an example, the S&P SL20 index, which was down 20% in March, is up about 33%. So, what that means is that investors have had to reassess their asset allocations. The asset allocations that you had at the beginning of the year are no longer valid. Investors have had to allocate to risk assets. And in the Sri Lankan context, when you talk about risk assets, they are equities and real estate.

Nayana: For me, there is a broader question of how COVID will fundamentally impact the real estate market. I agree with Naveen. Everybody is looking at these reallocations. And real estate is one of those sectors that people look at in an environment where interest rates are roughly around inflation rates. But the question is, how is real estate going to change in the short term? And what is the impact going to be in the medium to long-term? You would need to disaggregate real estate into residential and office retail, and perhaps land. We tend to talk mostly about residential, but there is a question about what the short term will hold.

Rental yields will feel some pressure: this is because rental markets in the residential space have slowed down. We have had a significant exodus of foreigners who kept the rental market, particularly in the CBD, propped up. The reversal began in the aftermath of the 2019 Easter Sunday attacks. The market was recovering only to suffer another hit. So, the yields will continue to suffer; to a lesser extent in the office space segment where leases tend to be long term.

The retail segment is hit hard because of tourism collapsing, and this is putting pressure on us as a group. I think that is going to be a constant in the current environment. Sales velocities have faltered a little bit, even though people are lucky. So, at the end of the day, I feel like there will be some blood on the street. But then again, I think smart investors who look at this medium to long term and make very calculated decisions will do very well.

Looking at the medium to long term, the big question I get asked a lot is if a city is fundamentally changing, would everyone pack up and move to the suburbs? No! It is ridiculous to think so. If I were to make a forecast, given where we are on the macros and the way we seem to be pivoting on mass transit versus vehicular traffic in transport, my sense is, you are not going to see the kinds of gains that I would have expected to see in the suburbs. I think there will probably be a much bigger rally in the centre of the city. And that value will remain until we start to pivot onto mass transit. If those get activated again, then things will change. This pandemic is a blip in time. If you consider the trajectory of a city one to two years from now, COVID will be a thing of the past. I do not think the dynamics of the property market will fundamentally change.

Chandaka: We need to consider how the market performed in the past to understand current conditions better. In 2011 we saw capital going into the real estate market, across the board: into commercial and residential real estate in central Colombo and the suburbs. Interest rates were low at that time. We saw real estate values appreciate by as much as 500% for some classes of property. Then the property market overheated in 2016-2017, and it had to cool off. The uptrend could not keep going for a lot of reasons: political uncertainty, government policy and various comments that affected sentiment, and then came the Easter Sunday attacks in 2019. So, for three years from mid-2017 to March 2020, real estate valuations did not appreciate as much, and we experienced a bit of a correction. Not a lot of capital went into real estate, and the sentiment was not there at all. Before the March lockdown, interest rates were between 10 and 12%. But when the pandemic struck, it was inevitable that the government was going to push interest rates down for liquidity purposes because the sentiment was such that everyone wanted to hold cash. People soon realised interest rates would come down further, and the currency would devalue. Even by late March, we received inquiries from opportunistic investors, looking at buying hotel properties at that time. And gradually, we knew that the property market was about to change as interest rates kept falling,and people began to face reality.

As soon as the economy opened after the near two-month lockdown in May, we experienced a pickup in apartment and land transactions. PreCOVID, investors were a bit hesitant to commit to real estate. Since the correction over the three previous years, I believe the current economic conditions make real estate ripe for investors. I expect this trend to keep going as long as interest rates remain at these levels. We are going to see a lot of activity around real estate.

Sri Lanka has to manage its debt repayments in the next few years. And this will have a direct bearing on the budget, on interest rates, and on how our macroeconomic policy will be shaping up. Naveen, if you were to allocate assets in this climate across fixed income, equity, and real estate, how would you approach this?

Naveen: A lot depends on the risk appetite of the person that is looking at this allocation. If you are risk-averse, the portfolio allocation will be quite different from someone who has a higher tolerance for risk. When we talk about asset allocations, there are two fundamental approaches that we need to keep in mind — long term strategic asset allocation based on long-term expectations is one. It does not matter whether you are a pension fund or an insurance fund, or if you are a person, looking at your long term expectations and macro-evolution of the country, there has to be a strategic asset allocation. Within that strategic asset allocation, you have tactical allocations, which is the second aspect. From a tactical allocation point of view, this is perhaps a time where people will allocate more towards risk assets like equities because the expectation is that equities will outperform fixed income. The expectation perhaps is that real estate will be an out-performer too. I am assuming that interest rates will remain range-bound till the end of the year. We are probably at the bottom of the current interest rate cycle, and we may go into a rising interest rate environment next year, and that is a different picture altogether. But considering how far interest rates have come down, for people to structurally react and reallocate back significantly from real into fixed income, we need to see a very sharp movement in fixed income rates. But for the moment, I think we are looking at a slightly higher allocation towards risk assets.

Nayana, you have been exposed to this market for a long time. How does a real estate investor navigate through the evolving macroeconomic realities of this country?

Nayana: Mirroring what Naveen said, it depends on the risk appetite of the investor concerned. However, I believe more people will move money out of fixed income into real estate and equities. The question is, how much do you allocate and where? Is real estate going to do better than equities or vice versa? The easy answer to those questions is, it depends. It depends on which equities you pick and which real estate product you commit to because you could crash and burn in either one. So, with these two assets, fundamentals must be sound. Have a specific investment, and ask, does this stack up for the medium term and is it what you want? If you are not dependent on yields, and you have a medium to long term view, real estate tends to do very well and is usually safe. But not if you invest in some ridiculously speculative project. But generally speaking, real estate – carefully selected – is a very safe place to put money to ride out any volatility. Inflation may rise faster, and if you depend on real estate yields for too long, then you are going to be in a bit of bother.

People should be looking at real estate as a medium to long term option. It would be silly to look at it as a short-term play

Can you talk us through inflation and what is the best hedge?

Naveen: At the moment, inflation is a concern. Even if you assume that inflation is under 5%, that brings us to negative real interest rates. So, inflation at the current level is somewhat worrying. However, given the fact that we have import controls in place, I do not see inflation being a huge problem, certainly in the next few months. The expectation is for inflation to remain at these levels. There could be a few spikes now and again because of supply-side shocks as opposed to demand-side shocks. But from a demand point of view, with import controls in place, I do not see inflation moving up by much. In the next few months and next year, it may be a bit of a different story. There is enough money in the system because of the liquidity injections, and private credit is slowly recovering. If import restrictions are eased or lifted too quickly, then with so much liquidity in the system, inflation could rise. Then we will again see those familiar problems making a reappearance like pressure on the Balance of Payments and currency depreciation. Therefore, at a policy level, Sri Lanka needs to be cautious in 2021. In terms of dealing with the import restrictions, excess liquidity in the system needs dealing with before easing imports restrictions, or inflation will accelerate.

Are investors considering rental yields at this point, or are they willing to put that aside and look for real bargains?

Chandaka: Over the last so many years, a large majority of investors looking at buying apartments or landed property had one primary concern. They looked at real estate as a long-term investment or savings. Rental returns were not a primary objective for a majority of these investors. To them, it mattered a lot that the developer was credible and had the financial strength to carry through the development, and that the completed property would be liquid. Get these fundamentals right, and rental yields will be decent as well. Even if there is an oversupply, it would be for a limited time because demand will catch up. I do not expect there to be a lot more supply coming in. There are projects at the early stages of development, and some of these may even get delayed or not completed, but this is a short-term view. It is critical to look beyond two or three years into the medium and long term when investing in real estate. Most astute investors do just that. They are not interested in rental yields but capital appreciation.

Have rental yields been declining over the last two or three years in Colombo?

Chandaka: It depends on the type of property. Some properties have held their rental yields, while others have seen a significant reduction concerning the value of the property. If the property was overvalued and has now corrected to what it should be, then with that adjusted value, the rental yields have adjusted as well. It has not been a significant drop, yet I anticipate that rental yields will come down further. It is so important to invest in the right property. Most investors tend to generalise apartment and land valuations, but there are many property options that could deliver both rental yields and capital appreciation.

Post-lockdown, there has been a significant exodus of expatriates, and that has caused yields to plummet. But, pre-pandemic, have you noticed any trends in the market?

Nayana: Their exit has been a gradual one since the 2019 Easter attacks and acutely felt since COVID. You will see some pressure on yields in higher-value segments of the market where expatriates tend to dominate. But I want to be clear on this: this does not mean it is all doom and gloom. It is a short-term phenomenon, and I believe it can correct itself within the next year or two. Three, at the most. People should be looking at real estate as a medium to long term option. It would be silly to look at it as a short-term play.

In this low-yield climate, can investors afford not to be hung up about the yield?

Naveen: Sri Lanka, like in any other economy, has interest rate cycles. We have a four to five-year interest rate cycle. Where we are right now, is perhaps at the bottom of the current cycle. We could be looking at a scenario where interest rates rise in 2021 and 2022. This interest rate cycle is nothing unique to Sri Lanka. If you look at any economy in the world, people forget that in the U.S., the 10-year bond was 15% in the 1980s, and the U.K.’s 10-year yield was 10% in the 1980s.

 As a country’s economy evolves, while you still have the cycles, the peaks of those cycles gradually start coming down. So, if we assume that Sri Lanka’s economy is going to evolve, we are going to go from this lower-middle-income country to an upper-middle-income country and perhaps into a high-income country. Then we should expect that structurally, our interest rates should come down. But having said that, as far as the current cycle is concerned, we are probably at the bottom. If you are a low-risk investor, you may have to take a bit of a hit. But you can stay in fixed income if you want.

Nayana: As long as inflation does not get out of control. That is, in a way, the difference with real estate. If inflation starts to go a little haywire, you are safe with real estate.

Naveen, do you also agree with that view if you were cautious and want to hedge against the possibility of an economy that is a little footloose, at least as far as inflation is concerned?

Naveen: Not all real estate is the same. Even with equity, you have to pick the right stocks, so it is the same with real estate. You need to pick the right property to invest. One thing to remember is that most individual investors own a house. So, they already have real estate exposure. When people start looking at their portfolio exposures, what we find is that people forget the house! They start looking at the investment portfolio, but when you are looking at your overall wealth, and its composition, it is important you take that into account as well.

What are the factors driving domestic demand for apartments in the city?

Nayana: This is a question we have spent a fair bit of time thinking about, as you might expect. So, what is going to drive demand in the property market? And what is going to drive primary domestic demand in Sri Lanka? So that is your home buyer demand. That is a function of where people make choices about living. On average, people spend up to two hours in the morning getting into work, the CMC has a population of 650,000 people, we have 800,000 people that float in every day. As a result, we have ridiculous amounts of traffic. How many of these people are going to start to move to places where they can recapture more of their life, and move closer to the city? My argument would be that this kind of sprawl of the city is at its peak in a way; you cannot go any further without imploding substantially. The only way you can unleash that is if you have fast ways of going back and forth. Minus that, you will have people starting to gravitate closer to the city, which is an opportunity for folks like us who develop apartments in the heart of the city.

But can you develop a product, and is there enough product in the market that fits that kind of affordability profile? That is the challenge between runaway land and construction costs. You need to be innovative to attract home buyers with affordable ticket sizes. Then there is some innovation required on mortgages. Interest rates dropping help. If you talk to banks, a few years ago, not many were interested in mortgages, all of a sudden, all of them were interested, partly because they had excess liquidity to invest. There is an opportunity for mortgage products to make apartments more affordable and accessible. Less than 10% of Colombo’s population lives in condos which is an outlier compared to the rest of the region where between 60-80% of a city’s population live in high-rise apartments. It is only a matter of time before Colombo sees that transformation, but for the short term, creating access to finance will be crucial to driving domestic demand. However, there is a temporary challenge due to the economic uncertainty caused by COVID. The tourism industry is a significant employer in this country and is at a standstill. But once we are through this crisis, and economic activity picks up again, when tourism revives, and interest rates also do not spike, the city of Colombo will thrive!

Less than 10% of Colombo’s population reside in high-rise buildings, whereas, that number is 40- 90% in the rest of Southeast Asia, even in India. How do you reconcile the pipeline of development projects with the demand?

Chandaka: To be honest, I do not think the pandemic is going to have an impact beyond the fact that it has reduced interest rates to 5.5%, which increases demand, and it helps absorb some of the supply. But looking at it from a different perspective, in terms of the pipeline of projects, the problem is that there is a mismatch between what buyers expect and what has been built. Some of the projects launched in 2004 and 2005 were conceptualised after the war ended. There was speculation about the country’s growth trajectory, and expectations were high that Sri Lankans living and working abroad, and foreigners too would invest in property. Many developers got carried away. They got ahead of themselves: in terms of how they positioned these projects and by also not understanding the dynamics of the local real estate market.

 It was all too speculative, and the market has an inventory of properties that do not match the demand. And now that some of these projects are completed or nearing completion, it is clear to everybody including the developers and buyers that they have not really gone into the details or understood the market well enough before they made those investment decisions. I foresee that a lot of this inventory will have to get cleared in the next 18 to 24 months; maybe 30 months. This inventory will not be sitting around for the next five or six years as some people may assume. I believe there will be a reset in the next 24 months. But this is the natural evolution of a real estate market. The market is maturing. Right now, we have projects backed by developers that have the financial strength to complete the development. They have more market experience and have products that make sense for where the demand is. We are at the stage where developers in future will think a lot harder before selling a product. If a property development is well positioned, it is because it fulfils a need of the end-user or occupant.

A substantial portion of family wealth is in housing, it is the largest asset class in any country, including in Sri Lanka — equities and bonds, fixed income pale in comparison to the size of the housing stock. Do you think conditions in a macroeconomic sense will change enough for that to flip?

Naveen: Again, it depends on the macroeconomic evolution of the country. If you look at the overall wealth picture of a typical family, real estate takes a large share. And that restricts how much you can put into the other asset classes. But before we start looking at asset classes or the allocations to assets, one must take a step back and ask the fundamental question: what are your long-term expectations and objectives? Ultimately, the asset allocation that you come up with should be the allocation which allows you to meet those objectives. You might suddenly decide that you need to relook at some of those objectives as circumstances change. The starting point of any asset allocation decision is to identify what those objectives are. Once you have those objectives, then you ask, what do my assets have to yield to meet those objectives? Based on your answer and looking at the expected returns, then you come up with your asset allocation. But as you rightly said, the problem in Sri Lanka is that a large component of that will be the house that you live. And for practical purposes, that is not going to yield you anything unless of course, you sell it.

Nayana: Sri Lanka has about 80% homeownership, which is remarkably high compared to the rest of the world. But the question is, what drives people to buy homes? People who already have homes are starting to upgrade and look for convenience and lifestyle improvements as their incomes improve. That is the evolution taking place in homeownership and driving the upsurge in condominium developments in the immediate suburbs of Colombo. You see this happening in Wellawatte, Dehiwela, and Nugegoda because that is where the affordability sweet spot is, right now.

It is clear that as we become more affluent, we shed our old lifestyles and go for more. It is the affordability cap. And right now, that is where the middle class is stuck. If we can break the barrier into the city, that will naturally happen. It is a lifestyle choice and not a purely financial choice.

Chandaka, You talked about the upsurge since the lockdown so what do you think is the primary driving factor?

Chandaka: Declining interest rates was the primary driver of the real estate demand surge. PreCOVID, mortgage rates and fixed-income yields were significantly higher, so the demand surge is because either property is more affordable, or it is a more attractive asset class at the moment.

Isn’t that somewhat speculative?

Chandaka: Not necessarily. The three years preceding the pandemic, the sentiment was that there was oversupply and the market overheated. So, with interest rates coming down, almost halving in a short period, there was pent-up demand. People also wanted to invest in real estate, but there was a lack of proper market information or visibility that may have held them back.

Can you put a number on the post lockdown burst of interest you mentioned?

Chandaka: Post lockdown we have transacted close Rs4 billion worth of real estate space between July and September. We have also concluded land transactions during this period, and this was a segment that was stagnant for a long time. The same time last year, and this was before COVID, people had little interest in real estate, and investors were hesitant. Had interest rates not declined, we would not have seen the surge in activity post lockdown.

What is your sense about how demand will play out?

Chandaka: I expect steady demand for land in the medium term. And in the medium term, you will see demand for apartments increasing with land prices falling slightly. It is difficult to forecast beyond the next 18 months or so. But I expect demand to be robust over the next 24 months, considering the slow period over the past three years.

Nayana: I think land prices will move, depending on the outlook for connectivity to Colombo. Colombo is going to continue to remain the hub. So, the speed of connectivity will be the driving factor in differentiating one property from another.

If somebody had investable money and was looking for the right opportunities in financial assets versus real estate, how would you play given that equities appreciated 33% in the second quarter?

Naveen: It is a slightly different ballgame there. You would see a slightly higher allocation to risk assets because you can do that allocation. Again, I would go back to that earlier point that I made. Ultimately, your asset allocation should be dependent on your long-term objectives, and from those long-term objectives, you should come up with a long-term return target. These are calculations that pension funds and insurance funds do, but individuals should be doing as well. Based on that, you will do a tactical asset allocation. But to broadly answer the question, you may still look at a higher risk asset allocation: a higher allocation to equities than you would have considered during the early part of the year. And you may be looking at a higher real estate allocation as well.

Now, I would prefer equities over real estate, partly because I like to think I understand equities better than real estate. But more importantly, because of the liquidity factor. If the fundamental assumption is that we are going into a period of rising interest rates, at some point, you have to do another shift in asset allocation. So, liquidity then becomes particularly important.

The light rail project is off the cards. There is also some evidence that a similar rail upgrade on the Kelani Valley line may not go ahead as planned, how does this look for the development of the city?

Nayana: The bottom line is that we have traffic at volumes that exceed what the roads can handle at this point. We have no choice but to go to a railway mode of transport that is faster because it is more reflective of what people want. Colombo has no choice but mass transit. From an urban evolution perspective, the economic and social pressures associated will become too big that you have no choice. But I feel like it is going to come back at some point, maybe in a different form.

Many are currently working from home. Can we discount expectations because of the impact the pandemic may have on the future of work?

Chandaka: I think we see some sectors that can work productively from home. But when it comes to office space, we are looking to work from home for a large percentage. So, we see reduced demand for commercial office space.

Naveen: The services sector, and certainly BPOs will have a lot more people working from home. You might see that shift in some of the more service-oriented companies too.

With interest rates low, it is an opportune time to look at real estate as a way to preserve and grow wealth. There are some concerns around inflations so real estate can ride through that

Nayana: Sri Lanka will not mirror the rest of the world so quickly. First, good connectivity which allows high-speed access is critical. Second, there is a corporate culture that varies from business to business and industry to industry. The IT and BPO sector is probably better geared than the others to shift to work from home. Even here, tech companies are better equipped than BPOs to make that transition because of the concentration of infrastructure and then the confidentiality requirements and so on required sometimes in BPOs. I think the jury is still out. And I guess that Sri Lanka is at the peak of a pandemic, or peak frenzy. We will have to wait and see what happens when things get better, and they will. There will be some changes in the way people work, but it would not alter the city.

What is the percentage of the apartments in the CBD which are vacant?

Chandaka: I would say occupancy is high between 80-85%.

There was also a question about REIT for decades, but there is some concrete action. How will this impact the market?

Chandaka: I am not sure if it is going to be attractive from an investment perspective. What will happen is they will allow more flexibility and that will create more opportunity given the current timing and the assets that can go into a REIT. I do not think the timing is incremental, but most certainly, it will impact the market. It will happen, but the market needs to mature a little more, and you need assets that go into a REIT structure. And I think the regulations and laws will also evolve in the next few years.

Nayana: I think REIT offers a glimmer of hope simply because most people stay out of real estate as an investment beyond their home because of ticket sizes. REIT will bring the ticket sizes down, and it will allow a much larger section of the population to access real estate returns.

Naveen: We have been waiting for REITs for an awfully long time because that is an asset class we absolutely need. It is going to broad-base real estate exposure. One of the stumbling blocks of getting real estate exposure right now is ticket size and the second thing is there are practical complications that come with buying a real estate asset which is not there if you invest in a REIT. It is an absolute requirement. That will get more people exposed to real estate outside of the homes they live in. But I think there is a challenge right now. If I am not mistaken, the tax treatment and stamp duty are not making REITs a viable option right now.

Any closing remarks or thoughts you like to share?

Naveen: These are interesting times to live in, from a global macro point of view. We have seen quite a bit of action from the central bank, which I think was justified. And the reason for that is, when you are in a crisis, it is imperative to ensure that your financial system is solvent and stable. If there is one lesson, we learned from 2008 is that a lack of liquidity or access to liquidity brings down financial institutions. But all this excess liquidity has driven up quite a strong rally in risk assets, and we expect that the rally perhaps will go into the early part of next year as well. But from an investor point of view, that is causing them to reassess asset allocation and to see if they can allocate a bit more into some of these risk. assets.

Chandaka: With the visibility that I have of the real estate market, for me, real estate will outperform fixed-income assets in the medium-term, even if interest rates move up. But it is critical that an investor understands the market dynamics and does proper due diligence before the investment. There is opportunity compared to where the other asset classes are at the moment.

Nayana: With interest rates low, it is an opportune time to look at real estate as a way to preserve and grow wealth. There are some concerns around inflations so real estate can ride through that. Finally, COVID will not fundamentally change the real estate market in Sri Lanka; we will survive it, and the market will thrive.