IT WOULD be wise to have an adventurous spirit and an appetite for challenge before purchasing a piece of land or property on an island which had suffered from ethnic strife for years and which, even now, is still not totally at peace.
However, despite Sri Lanka’s past difficulties and present political uncertainties, Nicholas Browne, an architect, and his wife Carla, a sculptress, are among a growing number of Britons who have spotted the potential for investment in the Indian Ocean island. It’s more exotic than Normandy (it has national parks with elephants and leopards); it is closer to paradise than Tuscany and Málaga (it has unspoilt and ravishing beaches); and it is cheaper than many of the usual second-home haunts of those British lucky enough to have the funds to buy a property abroad. “It’s also for people who feel that Europe is full up and who love the East,” Nicholas Browne says.
He and his wife have bought an acre of beach at a place called Merissa for a figure that would not even get you a studio flat in a poor area of Liverpool. He plans to design his own house. “I want to build something that’s low-profile, but I admit it’s an indulgence,” he says.
Sri Lanka is outstandingly beautiful, but what makes it such a special island is its contrasts in climate and vegetation: from dry deserts with leopards to fertile tea-plantation country, rugged mountains and lush jungles. Because of its small size, the island can also be explored relatively easily. Towns such as Kandy in the centre of the island, which is rich in temples and palaces, can be reached by a Victorian-style steam train; and if you happen to be a cricket lover, nowhere on this planet is it played with such passion, originating from the days when Sri Lanka — as Ceylon — was a British colony.
However, buying land or property in Sri Lanka requires considerable homework, exceptional bargaining skills because of multi-ownership problems, and an awareness of two crucial factors: the Tamil Tigers in the north have signed a ceasefire, ending 30 years of conflict, but further peace negotiations have stalled; and the Marxist-backed Government, elected in April, is imposing a 100 per cent land tax, with the agreement of the parliament in Colombo. The Brownes remain philosophical.
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“I like the idea of being in a country that has a bit of edge, and anyway I don’t think anyone has a God-given right to have a limitless horizon and sip cocktails,” Nicholas Browne says.
They have beaten the land-tax rise because they have already completed their purchase; and even for future buyers there is a loophole: under the new legislation, no tax will be applied for buyers who form a company under “board of investment regulations”.
Nicholas Browne, 56, said: “Foreign investment is a political issue, especially in places like Galle (an old Dutch fortress town in the south), but the fact is that many of the ancient buildings there have been beautifully restored by foreign investors and would certainly have become derelict without their intervention.”
Sri Lanka is 12 hours from Heathrow, and with unpredictable oil prices there can be no guarantee that the cost of a return flight (£584 on Sri Lankan Airlines) will not rise. But if you are worried about flight costs, it’s unlikely you will be thinking of buying a place in Sri Lanka.
Charlie Hulse, who has lived in Sri Lanka since 1974 and runs a real estate business in Galle, which boasts one of the most spectacular Test cricket grounds, had to negotiate with 12 separate owners before buying the beach site for Nicholas and Carla Browne. “I literally had to dole out cash from a suitcase to each of the 12 owners of the land, huge wads of rupees at a time (150 rupees to the pound),” he says. “They all came to my house and some of them were at each other ‘s throats. None of them would accept a banker’s cheque, it had to be cash. They sat there, counting it all out. Still, by Western standards, property prices are low.
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“People want beach properties. One beautiful old home 200 yards from the beach, ten miles from Galle, has just gone for $80,000 (£53,000). But there are also some wonderful places up in the hills. There is an 11-acre property currently for sale for $60,000 (£40,000), but it’s a long way from the beach.”
There is also a four-acre island off the south coast of Sri Lanka at Tangalle, going for $1 million. “It’s absolutely stunning,” he says.
“The fact that the war has come to an end has encouraged people to come here and buy property, but at the moment, with the new Government, politics are a bit alarming.”
Charlie Hulse, 75, is one of a number of key middlemen operating in Sri Lanka whose services are vital in negotiating deals. One condition set by the planning laws is that no house can be built within 30 metres of the sea. Even before Sri Lanka’s parliament approved the land tax on September 7, he was recommending clients fend off the threat by setting up a company in Sri Lanka through which to buy a piece of land.
“It only costs about $2,000, and that way you avoid paying land tax.” There used to be a 100 per cent land tax, which was abolished about two and a half years ago. “It’s madness to bring it back, because it might put people off buying or selling,” Charlie Hulse says.
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Meanwhile, the Brownes are pushing ahead with their beach-view plans. They are aware of the sensitivities of building a home on an island where a millionaire may be living in style next to a family crammed into a shack with only a few coconuts to sell. “But I’m not interested in a trophy house,” Nicholas Browne says.