March 8, 2003

Teardrop isle smiles once more

Colombo is striving to become "Asia's Majorca" as canny tourists snap up postwar bargains, says Eric Ellis

Sri Lanka can raise conflicting images in the minds of potential tourists. Government authorities depict a tropical paradise of swaying palms and deserted beaches, but for the past 20 years this Indian Ocean island has been more closely connected with suicide bombers, terror and civil war.
Since 1983, about 65,000 people have died in a civil war that has shattered the economy and made the teardrop at the southern tip of India one of the world's saddest places.
A British colony until 1948, Sri Lanka was never seen as the perfect holiday place, let alone a retirement idyll. The infrastructure had broken down, and there was a very real chance of being blown up at the airport on arrival.
But now peace is breaking out in the land once known as Ceylon. The Liberation Tigers of Tamil Eelam, who fought for two decades for a Tamil homeland in the island's north-east against successive governments in Colombo, have defused their bombs, emptied their cyanide capsules and, crucially, dropped their separatist demands. Everyone's being remarkably nice to each other.
Now as terrorists walk out of the jungle to a patriot's welcome, the scene has been set for peace and a return of confidence. International airlines have dusted off dormant schedules and holiday-makers are returning to a stunning island that was once a required stop on the international hippie trail. Many of those hippies, now recast a generation later as yuppies, have decided to stay.
After years as a tourism pariah, the island is now buzzing with talk - much of it probably premature - of becoming "Asia's Majorca". These pundits speak of a retirement paradise for Asia's western expatriates who, after several tours out east, have become accustomed to Asia's "gentler" ways (read cheap servants and balmy weather) and cannot face head office and the politics and poor weather that form part of the western lifestyle.
Websites such as lankaland.com, run by Achim Schwarze, a 45-year-old Berliner, offer stunning Sri Lankan estates at prices that would scarcely buy a studio in Balham or Brooklyn.
Acting for local owners desperate for money, Mr Schwarze has 25 properties listed on lankaland.com, ranging from 2,000 sq m of a former cinnamon plantation for $12,500 ( £7,941) to a $26,000 "colonial house" or $390,000 worth of palm-fringed Indian Ocean beach frontage.
Most of Mr Schwarze's properties are priced under $150,000 and are gathered along Sri Lanka's relatively peaceful south-east coast. Most require some renovation - labour is cheap in Sri Lanka - but some can be occupied immediately.
"I have a five-bedroom colonial house on 3,000 sq m for just $68,000," said Mr Schwarze, who has at various times been an internet entrepreneur and written self-help books. "You can move in immediately."
The coast's expanding expatriate community is nothing if not eclectic. One of Mr Schwarze's listings cites a neighbour who is a "Danish yoga teacher", which
Mr Schwarze says proves that there is already tourist access.
Further south, in Galle town itself, Briton Jack Eden runs a holiday letting agency. He moved to the old Dutch fortress town in 1998 after the Asian financial crisis, when Coutt's Bank, Queen Elizabeth's bankers, laid him off a day after he returned to Hong Kong from family holidays in Sri Lanka.
"It was the best thing that ever happened to us," he said.
Returning to Sri Lanka, the Edens have not looked back. They bought an ancient villa inside the Galle fort walls for $40,000. Beautifully renovated, Eden's house is worth probably eight times that today. The family rents it out as luxury tourist accommodation from their website, villasinsrilanka.com.
A succession of people from Hong Kong, Singapore and London have also bought villas in the Eden neighbourhood, prompting a minor British recolonisation of the old town. "There was nothing really keeping us in Hong Kong," said Mr Eden. "It was the best thing we've ever done." "And they play cricket here."
Mr Eden and Mr Schwarze said that the legal process of buying property in Sri Lanka is similar to that in Europe.
"Unlike Indonesia and Thailand and other places in Asia, you can have full title in Sri Lanka," said Mr Schwarze.
In April 2002, Colombo relaxed a prohibitive tax on foreigners buying island property that required them to pay a state levy equal to the property's cost. Mr Eden said the government may reinstitute the tax, which he regards only as a medium-term confidence booster to lure foreign investors.
Mr Eden warns foreigners against seeing the island as a short-term Eldorado. While prices for unrenovated properties have generally jumped up four-fold or more in the past two years, Mr Eden said: "This is not the place to buy and flip. If people come here with that intention they will be disappointed."