The property market in Sri Lanka evolved over the past few decades, from fulfilling a functional role into multi-million construction industry. The end of the civil war in 2009 paved the pathway for numerous infrastructure projects. Now, this industry is among the top five contributors to GDP.
Likewise, modern houses and luxury apartments began to recolor the real estate canvas of the country. Not to mention the surge in commercial spaces such as showrooms, offices, and restaurants. Similarly, the booming tourism sector prompted new hotels to crop up in various cities. As a result, the land prices steeply climbed upwards. Prior to COVID-19, the prices of land for sale in Colombo increased by 9 – 17 percent p.a. Let’s take a look at what the present and future market conditions illustrate.
The Residential Property Market
The housing needs of the population is close to 100,000 units per year. As a result, there is high demand for land and property. 29 percent of the Sri Lankan population resides in the Western Province while 11 percent calls Colombo its home. Hence, plots of land and homes are in low supply in the Colombo region.
As a result, apartments in Colombo became a popular choice. These listings vary from luxury condos to apartments for sale with basic features. Apartments for sale in Colombo 3, similar to properties around Galle Road, offers the epitome of metropolitan lifestyles. Furthermore, apartments for sale in Dehiwala have gained profound interest. It indicates how appealing suburbs have now become. Meanwhile, houses with land for sale in Colombo are available in prominent locations. Furthermore, these provide ease of access to shopping malls, business centers, and popular hotspots in Colombo.
Likewise, well established educational institutions are ample in the Western Province, attracting students from other regions. Similarly, a large migrant working population looks for accommodation in and around Colombo. Being the commercial capital of Sri Lanka, this city is known for providing abundant job opportunities compared to other regions. Therefore, rooms for rent are essential for temporary residence. On the other hand, houses for rent also serve a massive market. Meanwhile, homes for rent such as townhouses and holiday cottages in tourist destinations have served the hospitality market even in the past.
The Commercial Property Market
Economic growth and FDI enables the commercial real estate market to expand. Bare land for sale are converted into mega shopping centres or modern workplaces. In contrast, old property for sale in Sri Lanka may still hold great value because of its location. For instance, a warehouse in Fort or a showroom space in areas of high footfall.
Then again, the high end property market makes use of the country’s natural beauty such as beachfront properties. The South and East coast is highly sought after for this purpose. Moreover, apartments for sale in Sri Lanka are ideal investments as they generate rental income, especially from the leisure and tourism sectors. With high apartment prices, apartments for rent are a financially feasible choice for tenants. This implies indulgence in luxury living spaces without having to pay a fortune. As tourism is expected to recover in the next 6 to 9 months, lettings of these properties may pick up once more.
As much as Sri Lanka appeals as a tourism hotspot, it is also an agriculturally rich nation. Although facts indicate that this sector is dwindling, large communities continue to depend on farming for their livelihoods. The most compelling evidence during the lockdown revealed the power of a sustainable local food industry. Of course, agriculture land for sale in Sri Lanka is readily available. For example, land for sale in Gampaha. Lush acreages of cultivation land is a specialty of Sri Lanka.
Impact of COVID-19 on the Property Market
In response to the novel Coronavirus pandemic, the government of Sri Lanka imposed a nationwide lockdown. Consequently, economic activity came to a standstill. On the positive side, the spread of the virus was contained but on the negative side, jobs and incomes experienced a profound dip. The effects were felt across diverse sectors but notably, tourism, retail and construction were some of the hardest hit. Nevertheless, construction projects are expected to slowly restart as the number of new COVID-19 cases drop.
Furthermore, construction firms are optimistic about resuming operations. Mandatory precautions are in place, both at construction sites and at the back-office. Another key point is the financial support the Central Bank of Sri Lanka is offering to construction companies. This is likely to help kick start projects with the aid of borrowings from licensed commercial banks. In essence, the government is keen on encouraging business activities. As a result, land for sale in Sri Lanka may soon return to its former COVID-19 values. However, global predictions state that the true impact of the pandemic will be felt once it is over. In spite of this, the Sri Lankan economy is expected to recover by 2021.
Until now, commercial property focused on utilising the space economically. However, social distancing demands a completely different approach. The first thing to remember is the health and safety among workers. This implies more pressure on workplaces to provide a spacious environment to practise social distancing. ventilation and proper hygiene is of utmost importance. With this in mind, landlords may benefit from better offers from corporate clients in the future. Although companies have reopened, work from home is a trend to stay. This might create more opportunities for co-working spaces.
Other Developments in the Property Market
Many factors facilitate the real estate boom in Sri Lanka. Firstly, the nation’s strategic position in the world map gives it a unique, logistical advantage. It is part of the One Belt, One Road Initiative. Additionally, it is located close to Southeast Asian economies and the Middle East. Furthermore, close proximity to rapidly developing India brings trading benefits. Meanwhile, prominent shipping routes connect the island with South Asia, the Far East and the Pacific region.
Secondly, the infrastructure has undergone significant transformation. The following areas are the primary focus of infrastructural development:
1. Sea Port and Airport Development
2. Colombo Megapolis
3. Development of High Mobility Road Network
4. Power & Energy
5. Telecommunication Infrastructure Development
Source: Ministry of Finance, Sri Lanka
The enhancements added to Colombo, building of highways and investments in transport systems have certainly improved the perception of the island. Some of the noteworthy projects are the Colombo Port City, Beira Lake developments and Lotus Tower. These are business centric real estate investments.
Meanwhile, COVID-19 may have dampened buyer confidence but as Warren Buffet says, “Be fearful when others are greedy, and greedy when others are fearful”. This seems to be the direction smart investors are now heading in.
If you are eager to study the market prices of real estate, ikman Property is a useful source for you. Observe what types of properties are hot in the market. Understand the area value and make a well researched decision.