Colombo: An Indian real-estate firm in Sri Lanka plans to help foreign investors interested in buying property here to avoid the 100% transaction tax by arranging 99-year leases. The high transaction tax discourages potential foreign investors from putting money into the country’s property market.
Real Estate Bank of India (Lanka) Ltd (REBI Lanka) plans to use an easy route for its clients by leasing property for 99 years. This will bring down the tax to 7%. The company has set a target of conducting 12,000 transactions by March 2008, REBI Lanka CEO Lakshmi Narayanan said. Already, foreign companies can buy entities, including listed firms that own land, without paying transaction tax. High-rise apartments are also exempted from the tax.
The firm expects to act as a one-stop shop for both local and international clients handling brokerage, financial services, databank facilities accessible through electronic media, web, magazines and toll free call centres.
Narayanan said they also plan to train people as the local market lacked trained professionals. Most of Sri Lanka’s property businessmen are “small timers” and the business is not organized on professional lines, Narayanan said.
The company was also raising funds abroad because of the high cost of finance here, he said. It is also eyeing deals with the government and raising funds on its behalf for construction services.