10th September 2009, www.lankabusinessonline.com
Developers of a luxury island resort managed by the Six Senses chain in Sri Lanka who have set up an investment fund will seek to raise further cash through a private share offering, an official said.
Neil De Silva, chairman of Dutch Bay Resorts which is to build the resort in north-western Kalpitiya, said investors can get returns from the first phase resort project as well as sale of luxury villas to wealthy clients in the second phase.
The resort project has been given a 15-year tax holiday from the Board of Investment and other incentives usually given to big projects by the investment promotion agency.
The six-star Dutch Bay Resort project, to be ready by 2011, is a joint venture between Six Senses and Swarna Dweep, an investment vehicle.
Swarna Dweep, set up by European investors and De Silva, a Sri Lankan entrepreneur, currently operating in Europe and the Middle East, has a 51 percent stake in Dutch Bay Resorts.
“Sri Lanka has been a missed opportunity,” De Silva said. “Now, with the war over, we’d like to better use this opportunity and bring in foreign friends and Sri Lankans overseas for equity investments.”
The island’s tourism sector is expected to boom with the end of the 30-year ethnic war in May when government forces defeated the Tamil Tiger rebels.
De Silva said he and his partners have already invested 36 million dollars in the project and seek to raise more funds through a private placement with other luxury property developments also planned.
“We will initially offer to friends and families and later call for public offers,” De Silva said.
“For Sri Lankan investors, the subscription amount is a minimum of 5,000 dollars.”
Investors can repatriate earnings which are tax free.
The investment, which will be locked in for a seven year construction and take-off period, is expected to generate a rate of return of 20-27 percent a year, de Silva said.
Earnings will be from operation of the Six Senes resort as well as sale of luxury villas.
The first phase of the project in Dutch Bay, off the north-west coast, will cost 75 million dollars and consists of 60 mangrove chalets – two-storey villas with plunge pools – and 20 luxury villas on the lagoon.
The second phase of the project, costing 100 million dollars, will consist of 80 villas, meant to be sold as luxury holiday or retirement homes to wealthy Arabs, Europeans and Sri Lankans.
Owners can lease them back to the developers.
“We can generate a high rate of return because we intend selling 80 homes, each with an acre of land, to the high-end market,” de Silva told LBO.
At current prices the villas are worth 2.4 to 2.7 million US dollars but prices are expected to rise when the resort starts operating.
The 9,000 square foot villas can also be rented for not less than 1,000 dollars a night.
Swarna Dweep is a Sri Lankan company established by Norwich International Consultants, a real estate business operating in the Kingdom of Bahrain since 1997.
According to its website, Swarna Dweep has been established to focus on development of tourism, real estate and transportation projects.
Kalpitiya - Related Links:
Kalpitiya Integrated Resort Development Project (KITRP)
- Kalpitiya Interactive Map with Survey Maps of Dutch Bay and Portugal Bay Islands
- Kalpitiya Integrated Resort Development Project (KITRP) - Investment Opportunities
- Conceptual Development Plan - Kalpitiya Tourism Development Area (Ipantivu, Eranamutivu, Kakativu, Vellai I and Vellai ii)
- Strategic Environment Assessment Report - Kalpitiya Tourism Development Area
- Bar Reef - Wikipedia
- Dive the Bar Reef