By Charindra Chandrasena Back in 2007, two British brothers, Nick and Christian Candy, together with Waterknights, the international property development company owned by the then Prime Minister of Qatar Sheikh Hamad bin Jassim bin Al Thani, embarked on an ambitious project. Their vision was to build “the world’s most expensive apartment complex”, One Hyde Park, in one of the world’s grandest cities; London. When sales opened 11 years ago, One Hyde Park began to smash world per-square-foot price records. Over the past decade it has continued selling at 10 times the price of average residential real estate in London, and nearly three times more than luxury real estate in the city, with one being sold for over $ 180 million in 2015. Sapphire Residencies Since 2014, luxury Indian hotelier ITC Hotels has been working on the company’s biggest real estate project to date, Sapphire Residences, Colombo 1, through which they hope to replicate the transformative impact One Hyde Park had on London real estate right here in Colombo. With the project set for completion in 2021, the apartments will go on sale on 2 October. Sapphire Residences comprises a 50-floor, 224-metre residential tower alongside a 30-floor, 140-metre high hotel consisting of 352 five star luxury rooms. Connecting these buildings will be Sri Lanka’s first Sky Bridge, a 54-metre horizontal structure extending from the 19th to the 21st floor, upon which a jazz bar and two infinity swimming pools will be situated. Overall, Sapphire will offer 50,000 square feet of offices, 40,000 square feet of amenities, and 30,000 square feet of retail space. The amenities of the residential tower include a cinema, bar, library, outdoor amphitheatre, full-service spa, fitness centre, multi-purpose sports centre and function rooms, among others. The hotel will include a conference centre and be crowned by the only helipad being built in the vicinity. The latter will not only be made available to VIPs, guests and residents, but also to meet medical and other emergencies and evacuation needs in the area. Ultra-deluxe However, as big as it sounds, the original project was to be even larger from a residential standpoint. The total number of apartments was brought down from the planned 400 to 132 at the outset, as the mushrooming of apartments and talk of a high-end condominium bubble in Colombo compelled ITC to find a unique value proposition for itself. The decision was to downsize and price-up. As Sotheby’s International Realty Sri Lanka Sales and Marketing Director Charles Phillpot put it, this will be ‘ultra-deluxe’. ‘Ultra-deluxe’, of course, comes at a price. Interestingly though, while big residential projects often take care not to price too many people out of the market, Sapphire Residences seems to pride itself on catering exclusively to the super rich. The two-bedroom units, the cheapest on offer, will be priced at $ 1.4 million each. The most expensive, a massive 19,000 square foot Master Penthouse, will cost a whopping $ 10 million, making it the most expensive apartment in Sri Lanka. The average size of the apartments will be 5,000 square feet. Sapphire was designed by internationally acclaimed French designer Philippe Starck, who is responsible for numerous interior design projects around the world. Visionary creator Philippe Starck has drawn inspiration from the island culture and the serendipitous nature of Sri Lanka for his work at Sapphire Residences. Sri Lankans will buy One Hyde Park apartments are owned by the world’s super rich, including Eastern European oligarchs, Middle Eastern Sheikhs, and Hollywood bigwigs. It has also gained a dubious reputation for being registered under corporations and individuals who don’t actually live there. Therefore, one may reasonably assume that the buyers of Sapphire Residences apartments would be Indian and Chinese tycoons, who treat it as an investment, as opposed to a residence. Phillpot doesn’t think so. “We are confident that 60% to 70% of the apartments will be owned by Sri Lankans who consider Colombo their main home.” Does Sri Lanka have the wealth to absorb such expensive apartments? Phillpot believes the prices are not too high when looked at from a regional perspective. It is also banking on the paradigm shift which is expected to be brought about in real estate by the development of the Colombo International Financial City, better known as Port City. “I think what we’ve got to look at are average prices in luxury residential projects around Asia. If you look at Singapore, it’s around $ 2,000 per square foot. Mumbai is getting close to $ 2,000. Over here, we are only $ 550 per square foot. When you consider what will happen at Port City, we are at the bottom of the curve.” Supply itself creates demand A report by Indian financial news outlet LiveMint in late July quoted an unnamed ‘key official’ of ITC Hotels as saying that, for the past few years, ITC Hotels has been under pressure due to subdued demand from so-called feeder markets, such as Europe and the US (from where it used to get most of its guests), resulting in poor occupancy and depressed tariff. It said that ITC has continued to build hotels with the conviction that in certain markets, supply itself creates demand. For instance, in Chennai, where ITC built the 650-room Grand Chola hotel, it was warned that occupancy will be the key challenge, but today it is running at 80% occupancy. If ITC is not worried about eventually finding buyers, are they worried about the time it might take to find them, which has led some projects to even halt construction? Yet again, I receive an emphatic no, this time from WelcomHotels Lanka (Pvt.) Ltd Vice President Subi George. “Firstly, most developments get the funding from the buyers and then construct. That’s not the method we are employing. We have gone ahead with construction, and we haven’t started marketing yet. We have set aside $ 400-500 million and we are not looking at the realisation from the sale of apartments to fund the investment. So it’s not something that bothers us. Secondly, the positioning we are taking is totally different from what is there in the market. We don’t have 400 apartments to sell so we are pretty confident.” In fact, Phillpot says buyers have even shown interest in the two $ 10 million Master Penthouses. “It’ll be really interesting to see who buys it. Already, you can guess the names of the people who are interested and who are all looking around already.” Whoever buys them will be extremely rich and rather flamboyant characters. Actually, anybody who owns an apartment here is likely to fit that description. ITC has set out on a long and ambitious journey. Its success would benefit Sri Lanka as a whole, so let’s hope their optimism is well placed.