By Imesh Ranasinghe  Anushka Thilakaratne (41) is a mother of two children, and for the past six years, her dream has been to own a house. Anushka and her husband have been living in a rented house for six years, after they were forced out by their in-laws.  Finally, after much anticipation, she thought her dream came true when she and her husband started constructing a house in January this year. Since then her seven-year-old son would constantly ask her: “Mama, when are we going to the new house?”  However, they have no answer for the child; the construction of Anushka’s house in Gampaha halted in May as she and her husband struggled to find money to complete the house’s slab. Her husband initially started construction on an eight-perch land purchased for Rs 1.2 million. However, the couple applied for a bank loan worth Rs 2.4 million, estimating a total of Rs. 3 million to finish the ground floor of the house. However, the bank only approved Rs 1.2 million, as Anushka’s husband – who works as a banquet manager in a hotel in Gampaha – wasn’t paid his salary consistently due to the pandemic. The bank had only released Rs. 600,000 in the first stage to build the house and complete the slab.  According to Thilakaratne, they have already spent Rs. 1 million to lay the foundation, floor, and put up the concrete pillars, which they are yet to find since construction was halted in May. “We need at least Rs. 700,000 more to complete the slab and show the bank in order to get the second part of the loan released,” she said.  She also added that apart from the increased expenses of materials, they had to find three different day contractors to build their house as the work did not go according to their plans, hence incurring more expenses to them. The dream to own a house has become unachievable for Sri Lankans after the Covid-19 pandemic hit the country. Contractors operating at losses Deric Liyanage (33) a contractor in a house building business operating in Horana, said that material shortage is the biggest problem faced by builders. Liyanage obtains bathroom fittings and tiles from the black market at double the price just so he can complete his contracts on time. He told us that the cost incurred to construct a single storeyed house of 2,500 square feet has increased by a maximum of 50% than in the pre-pandemic period. Only one site is working on his business, while he has stopped taking new contracts due to the uncertainty in prices, as he would have to bear losses going forward, not to mention projects being halted halfway by the owners due to their own finance issues. “Most of the people who had taken bank loans use some of the money to build the house, while a part of it is used for other purposes. But due to the economic situation now, most of them stop giving priority to the building of the house, and use that money for other priorities. When this happens, the next stage of the loan is not approved by the bank,” he said. Moreover, he said some people are also signing contracts in stages, where a house with three floors will be built in three separate contracts signed one after another, as people do not have the required money to complete the whole three floors in one go. Another contractor told us that the price of materials used for construction such as PVC, electrical fittings, iron rods, and steel bars have increased by at least 40%. Day labourers demand at least Rs. 3,000 per day, from the Rs. 2,500 they were paid per day earlier. “We only get a few contracts to construct houses; it is not like before, and even the new contracts are stopped halfway as the owners run out of money required to complete the house,” the contractor said. In those situations, the contractors try to negotiate their original contracts and reduce the rates given so that they can keep on working. A typical list of prices charged by contractors for a one-storey house contract, as per one of the contractors we spoke to, is as follows:  

• Excavation of foundation = Rs. 65 per cubic foot

• Cording = Rs. 13,000 
• Concrete pillars from base to top:

(9 × 9) = Rs. 240.00 (12 × 12) = Rs. 255.00

• Tie beam cages tied to the foundations

Length (9 × 9) = Rs. 220.00 Length (4 × 12) = Rs. 110.00

•  Laying the foundation

One cubic meter of black stone = Rs. 8,000.00

• Block stone laying  (4 × 7 × 14) = Rs. 40.00
• One large brick  = Rs. 20.00
• 1,000 small bricks = Rs. 7,500.00
• 1 linton

(4 × 4) = Rs. 120.00 (6 × 6) = Rs. 140.00

• Plastering the interior walls

One square foot = Rs. 40.00

• Exterior wall plastering

One square foot = Rs. 50.00

• Large door frames to hold windows = Rs. 2,500.00
• Small frames for window sills = Rs. 2,000.00
• Plasting beams, pillars

One square foot = Rs. 150.00

• Plastering the rain gutter

One foot = Rs. 200.00

• Tile laying on the floor 

One square foot = Rs. 70.00

• Bathroom tiling = Rs. 120.00
• Pantry tiling, 1 sq. ft. = Rs. 130.00
• Black cutting 1 sq. ft. = Rs. 50.00
• Clay and whitewash = Rs. 60.00
• Concrete slab, wire laying sq. ft. 1 = Rs. 200.00 (black board)
• Stairs from Rs. 50,000

 *These prices increase by 18% onwards for each floor added to the house. Building material market  According to the Construction Industry Development Authority, excluding cement from the specified goods list by the Government in October 2021 caused the price limits, thereby creating a volatile cement market.   The weighted average of cement prices of a 50 kg bag (Ex: factory, imported, and market prices) have gone up by 7%.  The average price of a cement block had gone up by 5% in October, while PVC, timber, wall tiles, electrical fittings, steel wire, and stainless steel have marginally increased, having been affected by the international raw material price, exchange rate, and government restrictions, while prices for labour wages increased owing to the pandemic situation, scarcity, and cost of living. Average price of 50 kg of cement bag sold by public and private dealers, which was at Rs. 568 since September due to the imposed maximum retail price (MRP), increased to Rs. 618.9 by October through the MRP’s removal. These prices could go even higher, with the country experiencing record inflation, and imports being cut more and more, with the decline of foreign reserves to $ 1.5 billion in the month of November. Owners run of money quickly  The construction work on Kelum Dissanayake’s (31) house in Badulla was halted in November after the slab was completed, as he also ran out of money to complete the work. Dissanayake, who is a contractor himself, started construction of the house in August 2021 by obtaining Rs 1.5 million through the first stage of his bank loan. Although an experienced contractor, his estimation of below Rs. 2 million for the ground floor of his house has now surpassed Rs 2.5 million while the windows, doors, and door frames are yet to be fitted. The reason for the increased expenses, he said, was the increased price of a bag of cement, increased expenses for sands and rocks, and the unavailability of cheap labour. He noted that he had to pay Rs. 15,000 for a cube of sand, and Rs. 14,000 for rocks in his area, while the prices were much less in the Badulla town. He added that a cube of sand cost around Rs. 12,500 and rock around Rs. 10,500 in the town, but that it increases when it comes to the area where he builds the house. His house is being built just 7 km away from the Badulla town. Dissanayake obtained a loan of Rs. 4 million through his wife, who is a government worker, at a concessionary rate of 4%. He is waiting for the next stage of the loan – which is Rs 2.5 million – to be released, as the bank is waiting for the certificate of consistency. When questioned whether he has taken up work to find the expenses required to complete his ground floor, he said that he has stopped taking work, as it is not beneficial to go to contracts these days to build a house. Vijitha Bandara (40) is another who has been struggling since 2020 to complete his house in Kandy, while his entire family of five shares a room in his uncompleted house for over one and half years. Bandara, who worked in a restaurant in Saudi Arabia, lost his job as soon as the pandemic hit in early 2020. By then he had already started construction of his house through the money he had saved after five years of work. By then he had managed to complete the slab of the ground floor. Bandara had to somehow complete the room with the little money he had, as he could not afford to pay rent for the house they were staying in. He has chosen landscaping as the source of his income, and is desperately looking to get a loan to complete the ground floor of his house. Bandara has three boys aged 24, 15, and 10 years, and the elder boy has started work at a hotel in order to support his father to complete their home. The construction industry in Sri Lanka The construction industry contributed 6.2% of GDP in 2020 from the previous year’s contribution of 7.4%, employing around 600,000 workers. The Colombo District Land Valuation Indicator (LVI) compiled by the Central Bank of Sri Lanka (CBSL), recorded an overall 6.8% growth rate in the first half of 2021.   The construction sector has grown rapidly in development of high-end residential, commercial space, hotel and resort construction, and infrastructure since 2010. The turnover value of the construction sector is estimated at $ 4.3 billion annually. Many local and international construction companies are active in the industry. Several large infrastructure projects are under development, including the PRC-built Port City on newly reclaimed land within Colombo’s city limits. The economic slowdown post-Covid-19 has dented some optimism within the real estate and construction sector, but analysts expect demand to pick up with the economic recovery, and low prices may offer opportunities for developers.  In particular, the real estate sector has reported renewed interest in housing and apartments as low interest rates have attracted buyers. According to global construction consulting firm Constrack360, the building construction industry in Sri Lanka is expected to record a compound annual growth rate (CAGR) of 15.1% to reach Rs. 2,231.5 billion by 2024. The residential construction industry, in value terms, increased at a CAGR of 9.7% during 2015-2019. The commercial building construction market in value terms is expected to record a CAGR of 16.3% over the forecast period.