Page 30 - QUALITY MAGAZINE_Volume 02 (Issue II)_Web Ready File (1)

QUALIT Y JANUARY 2024
10 How can we measure the level 12 What can you tell us about real

of real estate literacy in a
estate literacy in Sri Lanka?
community?
Measuring real estate literacy involves assessing Sri Lanka is well-regarded for its high general literacy
individuals’ knowledge of real estate principles, market rate, standing at over 92%, with male literacy slightly
dynamics, legal aspects, and investment strategies. higher at approximately 93% and female literacy around
There are several methods to measure this literacy 91%. However, when it comes to specific segments
level: like financial literacy or real estate literacy, there is a
significant lack of proper statistics or research.
1. Surveys: Conducting surveys that include questions
about mortgages, interest rates, property taxes, and
other real estate topics can provide insights into the Based on your experience,
community’s understanding of real estate concepts. 13 how would you describe the
2. Focus Groups: Organizing focus groups allows for real estate literacy levels in
in-depth discussions where participants can express Sri Lanka?
their knowledge and understanding of real estate With nearly 15 years of experience in the Sri Lankan
transactions, market trends, and legal aspects. This property sector as a Chartered Valuation Surveyor, I
qualitative approach provides a deeper understanding can say that real estate literacy in Sri Lanka is lacking
of the gaps in real estate literacy. across all segments-individuals, corporations, financial
3. Real Estate Literacy Assessments: Developing institutions, and governments.
standardized assessments to test individuals’
knowledge on various real estate topics can quantify
literacy levels. These assessments can be used in 14 Can you provide some examples
educational settings or community workshops. of this lack of real estate
4. Analysis of Real Estate Transactions: Reviewing literacy at the individual level?
real estate transaction data can reveal patterns that Certainly. At the individual level, wealth often
indicate the level of literacy. For example, high rates comprises various assets, with real estate, particularly
of foreclosure or legal disputes may suggest a lack of the primary residence, constituting a significant
understanding of real estate principles. portion. However, many individuals lack knowledge
5. Tracking Participation in Educational Programs: of basic property documents, such as survey plans,
Monitoring enrollment and completion rates in deeds, building plans, and lease agreements etc. They
real estate educational programs can indicate the also often do not understand planning regulations that
community’s engagement and literacy level. Increased impact on property values. Also, people lack with the
participation often correlates with a higher level of basic knowledge of property rights and how it impacts
literacy. on property values.
For instance, individuals frequently lack understanding
of return on investment and proper allocation of
resources when creating real estate. This leads to poor
11 Are there any statistics from investment decisions, such as investing in residential

properties that turn into sunk costs or reducing land
other countries that highlight
values by not utilizing the land properly.
real estate literacy levels?
Yes, several statistics from developed markets highlight Many condominium property buyers do not fully
grasp the concept of condominium living. They
real estate literacy levels. For example, a survey by the often lack knowledge of the necessary documents,
FINRA Investor Education Foundation found that only costs associated with condominium living (such as
37% of respondents correctly answered questions service charges), and the relevant laws. This lack of
related to mortgages, interest rates, and property understanding can lead to financial strain and legal
taxes. This indicates a significant gap in understanding issues.
basic real estate concepts. When it comes to investment properties, people often
Similarly, the Urban Land Institute’s focus groups lack the ability to analyze returns on their investments.
revealed that 60% of participants felt unprepared for This can result in spending money on building
real estate transactions due to a lack of understanding properties that do not yield the expected returns, or
of market dynamics and legal processes. These findings overspending relative to the returns. Consequently, we
suggest that even in developed markets, there is a see many under-constructions residential properties
considerable knowledge gap in real estate literacy. where people struggle to complete and occupy,
By using these methods and examining such statistics, unauthorized constructions that cannot qualify for
we can better understand the real estate literacy mortgage loans, irrational spending on buildings that
levels in our community and identify areas that need the market is not willing to pay for, and properties that
improvement. cannot be developed due to legal issues.

Department of Industrial Quality Management
Department of Industrial Quality Management
28 Department of Industrial Quality Management Department of Industrial Quality Management 29
General Sir John Kotelawala Defence University General Sir John Kotelawala Defence University