Founded by Dr Dinuk Jayasuriya and Brett Negus and strengthened with the joining of Chairman Kumar Sangakkara and CEO Reza Magdon-Ismail, Crystal Property Group (CPG) is the product of a shared vision and belief in Sri Lanka’s potential as a luxury travel destination. Crystal Sands, The Six and Digana by CPG – the group’s three projects reflect this vision, which has elevated CPG into the limelight as a market leader in luxury property and leisure development.

Construction for CPG’s projects took place amidst three tumultuous years as crisis after crisis swept the nation, bringing construction to a standstill and the economy to the brink of collapse. While other projects ground to a halt, CPG was able to deliver on schedule and is now making profits in a niche market with no competition. “Being on a trajectory to deliver a 5% USD return to our investors in these market conditions is no small achievement,” shared CEO Magdon-Ismail.

In this interview with Echelon, he reveals the crucial elements behind the group’s success as a luxury leisure developer and hospitality operator.

What was the inspiration behind CPG, its creation, and its ethos?

Dr Dinuk Jayasuriya returned to Sri Lanka to invest in a business, wanting to give something back to the country of his roots after building a successful career for himself. He saw potential in Sri Lanka’s tourism sector. I remember Jayasuriya explaining to me the potential of developing real estate outside of the urban setting by following a tourism angle during one of our discussions.

Strictly from an investor’s perspective, land is much cheaper to acquire outside the city, and the volume of competition we had was significantly lower. The tourism industry was rapidly increasing on the southern coast at the time, and there was a significant opportunity.

When I met Jayasuriya, I had already built a fulfilling career in property development and owned my own business. I was mulling over what my next project would be at the time. We happened to be living in the same apartment building at the time, and our friendship didn’t take long to grow after a chance encounter in an elevator.

His vision for Sri Lanka and real estate resonated with mine, and he suggested we join our ventures together. Kumar Sangakkara joined around the same time I did after he struck a friendship with Jayasuriya and me. Kumar has a keen eye for art, design, and real estate. He especially has a proven knack for identifying land which had the potential to grow in value. Although he had dabbled in property investments, he was also interested in expanding into the property development angle and CPG was an extension of that interest.

CPG began as the product of a group of friends with a shared vision coming together. This friendship is one of the reasons behind CPG’s unique identity and success. Being close friends kept us together and helped us navigate through the volatile environment we’ve had over the past three years and this sense of unity extends throughout the entire organization. We all have different responsibilities, but all are working towards a common goal, and we’ve stayed strong and delivered on our promises, even after facing wave after wave of calamity.

I wouldn’t say that these elements make CPG unique compared to its competition. Yet, together with our belief in Sri Lanka’s potential, they have helped the group achieve what it has today.

Tell us more about the three projects under CPG

The first is Crystal Sands, a beachfront condominium apartment hotel with 25 luxury sky villas located on the southern coast of Sri Lanka, which we opened in May last year. Our subsequent project, The Six is also a beachfront development with a concept unlike any other in Asia. It consists of six luxury villas designed by celebrated architect Chamika De Alwis, each villa featuring a unique design inspired by six beaches around the world.

Digana takes a different direction. Located facing the picturesque Victoria reservoir, the project features uniquely designed residences that are simply palatial in aesthetics. All three are designed and constructed with meticulous attention to detail, sparing no compromise, featuring all the amenities and luxuries needed to enjoy a luxurious leisure experience with the privacy and security expected of a luxury development.

Could you elaborate on how CPG’s approach to developing a property with a tourism angle sets it apart from the competition?

The critical difference would be that we follow a resort-residence model. Investors can own and enjoy a holiday home in a tropical paradise and earn revenue from resort operations when they aren’t visiting. It enables them to obtain returns from real estate and tap into financial returns of the luxury leisure, tourism and hospitality industry. All CPG products are fully furnished, serviced and managed, providing investors with a genuine turnkey experience.

Although a few other developers have projects that follow a similar concept, we are thus far the sole entity in the country operating in this model. We have had a great start, and as the tourism industry continues to revive, we expect returns will continue to rise.

What makes CPG’s projects attractive as an investment opportunity?

It’s because of our performance and capacity to deliver. We deliver value to our investors and shareholders even amidst challenging circumstances and are transparent in what we do.

Returning value to our investors is our driving force because we wouldn’t be here if people didn’t invest in what we offered. For example, Crystal Sands was our first project and is complete and operational today. Construction began in June 2019 and was completed by March 2022 while navigating through the shockwaves of the Easter bombings, the Covid pandemic, and even the subsequent economic crisis

We had a few competitors in the beachfront condominium space who began construction before us, but we were the first to finish. Only one was able to complete construction according to plan but did not deliver the same level and service we do at Crystal Sands, and none are following the same model of business we do. We are proud that throughout the most challenging times, we were able to deliver our obligation to our investors.

By operating in a niche market catering to luxury travellers and real estate with no direct competition, our investors have also continued to receive financial returns from their investments today. 2023 will be our first full calendar year of operation, and I expect to deliver a 4-5% return in USD as tourism continues to grow, an unparalleled return that you would have difficulty achieving even with a property in Colombo before the waves of crises we faced. All of our investors are happy with the direction we’ve taken and are heading towards.

 

The trust and confidence our investors have in us are some of the biggest strengths behind our success and a testament to CPG’s value as an attractive investment opportunity. We have internalised our obligation to our investors and recognize the importance of being transparent in all of our projects. This includes The Six, our luxury villa project that is on schedule for completion without compromise on its quality despite the unprecedented economic crisis, the staggering escalation in construction costs, and the currency devaluation we have faced.

We were midway through construction when the economic crisis reared its head, grinding the entire property development and construction industry to a halt. We had to write to our investors sharing with them how prices have increased because of the circumstances. Because we were transparent and forthcoming about the circumstances, all parties agreed to a proposed 15% increment in the sales price. They believed in our capacity, appreciated that we were being transparent and clear with our communication and that we were operating in their best interest. Today, The Six is only six months from completion and is the only fully integrated beachfront development on the Southern Coast and will be one of the best villa development projects in Sri Lanka.

From a shareholder’s perspective, our equity base has grown 300% in the past three years amidst a volatile market. We’ve delivered these returns to our shareholders without needing any additional requirements from them. They also believe in the vision we have and are happy with the direction we are taking.

Our product is an attractive option for our Sri Lankan ex-pat community living overseas who desire a holiday home in Sri Lanka and want to contribute to the country’s economy. We offer a beneficial vehicle for investment with relatively low risk, attracting investments beyond Sri Lankan borders.

 

What can you tell of the people behind CPG and their contribution to unlocking opportunities in this challenging market?

The hard work of our teams on-site and corporate was the foundation for CPG’s success. Their drive and dedication made it possible to deliver as promised to our investors and shareholders despite the circumstances we’ve faced. Everyone had a sense of ownership, of responsibility for their work. They understood the obligation we have towards our investors and delivered

At a time when many are considering migration, our team has stuck together because the shareholders and board of directors understood the value of investing in our team for the long term and making those investments today.

To keep a great team, you must look after them, especially when so many talented professionals are leaving the country searching for greener pastures. Our shareholders and board of directors prioritized this over keeping costs low and paying higher dividends. Different organizations have varying perspectives, but for me and CPG, our most valuable asset sits off our balance sheet and is our human capital.

Another core reason for our ability to deliver developments through challenging times is that while most property developers outsource talent, we brought everything in-house, which enabled us to operate with greater synergy. We invested in the right talent to get the job done, from design to project management and procurement and every step of the process.

What makes Sri Lanka a compelling and exciting market for CPG?

The past three years were challenging for the Sri Lankan economy, especially in the construction, tourism and hospitality spaces. But CPG has persevered and is now perfectly poised to capitalise on the current rise in tourism. We’ve already completed Crystal Sands, and The Six is also nearing completion.

CPG is here today because three friends believed in Sri Lanka’s potential as a premier tourist destination. Sri Lanka was number one on Lonely Planet’s top ten list of countries to visit in 2019. The accessibility, the opportunity to experience different climates and geographies within only a couple of hours, the heritage and culture, the nature and wildlife; it’s no surprise why Sri Lanka is an attractive destination for travellers.

Our belief in this is the compelling reason behind our commitment to face the challenging situations we encounter, no matter how frustrating they can be, because we have a story to tell and value to add.

What is your forecast on Sri Lanka’s economic landscape, and how will it affect CPG moving forward?

The real estate environment in the country has slowed because of higher interest rates and construction costs. It has been challenging, but we’ve been able to deliver because of our operating model, catering to a niche, premium market and developing properties outside of urban areas, focusing on leisure and hospitality.

The tourism industry is already recovering and recovering fast. What we offer is an attractive investment with steady returns and with the improving perception of the country we expect the trajectory of growth to continue and provide further upside for CPG.

Do you believe Sri Lanka’s leisure and tourism industry should also reposition itself, catering to the luxury-leisure traveller moving forward to build a more resilient industry?

Doing so would make Sri Lanka’s tourism industry more resilient and sustainable. A luxury traveller would have more capacity to spend and travel than a budget traveller. By focusing on quality over quantity and catering to a more premium tourism market, delivering niche and exclusive experiences to its travellers, Sri Lanka’s tourism industry won’t have to rely on and sustain large volumes of travellers to reach the same margins. We would be delivering an overall better product to our tourists with the limited space, infrastructure and resources we have.

What’s CPG’s next big project after Digana?

CPG has already purchased more land on the southern and eastern coasts. We plan to develop them in the future, but first, we want to focus on completing what we have on our plate already. We have a growth plan and are ready to mobilize at the right time.

AN UNFETTERED BELIEF TO SCALE THE HEIGHTS AMIDST AN ECONOMIC DOWNTURN

 

• Marlon Jayawardena, Chief Operating Officer of Crystal Property Group

For Sri Lanka, the past three years have been rife with challenges, opportunities hardship and uncertainty, especially for the tourism sector due to the Easter attacks, Covid-19 and the unfolding economic crisis.

Global sentiments and travel restrictions yielded below half of the tourist arrivals in 2023 YTD compared to 2019. This drop led to an exodus of talented industry professionals seeking greener pastures overseas – increasing the skill gap as the months went on.

We at CPG have an unfettered belief in our country and what it has to offer – not just in terms of attractions but also in the warmth and hospitality of our people. Completing Crystal Sands and becoming operational was an uphill battle, but the team’s unshakable belief, passion, resilience and agility kept us on track.

Straight roads don’t make good drivers, and facing challenges has developed the grit to take the country and CPG to the next level. Our mission is to provide the best experience possible and give our guests the feeling of home. To do this at scale, we must ensure that the right people and processes are in place.

As Chief Operating Officer, my mandate revolves around building synergies, maintaining standards and facilitating business growth. I prioritize developing talent and creating a culture of continuous improvement. I am proud to be part of the incredible team at CPG and look forward to the future with great optimism and enthusiasm for the journey ahead.

DARING TO BE BOLD: THE CRUCIAL DECISIONS THAT UNLOCKED OPPORTUNITIES

 

• Omar Mizran, Chief Projects Officer of Crystal Property Group

Our Projects Team at CPG had the daunting task of navigating through the aftermath of the Easter bombings, the Covid-19 pandemic, and the resultant financial uncertainty to deliver the projects at hand. This unprecedented situation disrupted the entire landscape of the construction industry in Sri Lanka, plunging its stakeholders into fear and anxiety.

Managing budget cuts due to the financial dip caused by the pandemic and the resultant forex crunch was one of the biggest challenges we successfully grappled with.

We strategically reviewed our position, and as the Chief Projects Officer, I worked with the team to establish a procurement arm within the projects team to directly reach producers rather than engage third-party agents and suppliers. Through careful analysis, we made some unpopular but necessary decisions, such as restructuring the contracted workforce and scope of work and taking on more of the work ourselves.

At CPG, we believe that with challenges come opportunities. We leveraged our expertise in leisure development and initiated new projects that involved more villa-type private, niche residential units catering to the growing demand. This creative pivot helped us stay afloat during the tough times while meeting the evolving needs of our clients.

Another valuable lesson we learnt was the importance of forging strong relationships with partners and stakeholders, from the contractors we work with to material suppliers. Communication and collaboration were crucial during the uncertainty, and we worked hard to build trust and mutual support with our partners.

The projects team at CPG has been successful in delivery because we have remained agile, creative, and collaborative, embracing opportunities and overcoming challenges that come our way.

BUILDING AGILITY IN THE FACE OF EXTRAORDINARY MARKET CONDITIONS: BEING DAMN GOOD AT FLOATING!

 

• Gavin Ramsay, Chief Growth Officer at Crystal Property Group

2022 was a year of adversity: most companies were pushed to their absolute breaking point and confronted with two stark choices – swim or sink. At CPG, we decided to float; and be damn good at it! We focused on the home court, ensuring we delivered to investors and shareholders as promised.

Tasked with presenting to the world who we are and what we are capable of, I found it required a certain level of honesty with oneself in making difficult and unpopular decisions. We strongly believe that the safest hands are our own, and I see that every day: in the team’s focus and determination, their ability to think on their feet and not micro-manage. Investing in a property developer in Sri Lanka is no longer straightforward. It now requires a deeper understanding and a long-term commitment; that is the spirit that guides us in everything we do.

Driving business development, revenue and achieving market fit during the current economic climate comes with challenges that have hardened us yet showed us unique opportunities. We have sharpened our brand strategy but honed our understanding of our consumer base. The way forward is clear, and I am confident we can deliver exceptional returns and unique products the CPG Way!