A Condominium for Squatters - Land Reform in Sri Lanka

Lauren Abendschein — Wed, 17 Jan 2007 15:09:19 -0500

Ashoka Fellow Darin Gunesekera has succeeded in securing deeds to a brand new condominium to more than 670 families – 4,000 people - in Sri Lanka who formerly lived in a slum. Property and regulatory system reform has gained momentum in recent years, and this model suggests significant potential for adoption by governments and landowners worldwide. Yet the challenges of replicating this successfully completed project speak to the immense difficulty of untangling the complex legal and social barriers to property regulations in the developing world.

In Colombo, Sri Lanka, the high cost of land forces low-income residents to squat illegally on public or private land. The squatter has physical occupancy of the land, but his opportunity cost is high because he cannot obtain services or invest in his house as long as he is there illegally; the landowner has legal title to the land but his opportunity cost is also high because he cannot realize the value of the land as long as the squatters are there.

The crux of Gunesekera’s Stock Market Housing Exchange is a deal in which squatter and landowner trade in their main items of value - physical occupancy and title - in order to unlock these opportunity costs. The land is sold and former squatters receive the rights to condominiums in a new building financed by the proceeds of the sale. The landowner receives the difference between the sale price of the land and the cost of the new construction. Former squatters choose the new building's design: bidding developers submit proposals and the winner is selected by vote.

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A Condominium for Squatters - Land Reform in Sri Lanka