Green shoots of recovery in Sri Lankan real estate

From being an investment hub to a wedding/wellness destination, the island nation is gearing for a full-on recovery

As with any other country across the globe, the real estate landscape in Sri Lanka has shifted due to users’ changing demands across the residential, commercial, and industrial sectors. Yet despite these shifts, leading industry players have met the challenge head on and swiftly adapted to their needs. 

Through their strength and determination, as well as the overall improving situation in the country, the real estate market has begun to show signs of recovery, signifying a promising future for Sri Lanka. 

Growing investment hub 

In a coverage by Ceylon Today, Jerry Kingsley, head of Sri Lanka at Jones Lang LaSalle, said investors are increasingly looking towards Sri Lanka as its real estate market starts to recuperate. They have been aiming to diversify their portfolio with hotels, healthcare, multi-asset classes, and industrial logistics. 

The current climate is also deemed as the best time to invest, according to Managing Director of Iconic Developments Rohan Parikh. 

“The main reason for this is because, in Sri Lanka and Colombo, the construction cost is higher than the land price, which is usually the opposite as opposed to countries like India and Malaysia. 

Therefore, when we make investments in Sri Lanka, it is sure to be a safe investment because it will not be exposed to price fluctuation,” he added. 

Developers have also been handing out discounted prices to buyers, which means choosing the right developer and project could lead to greater return on investment in the long run. 

Among those who benefitted from the increase in demand and improving market sentiment were major winners at the 2021 PropertyGuru Asia Property Awards (Sri Lanka), namely, Home Lands Skyline (Pvt) Ltd’s Canterbury Golf Resort Apartments (Best Condo Development – Sri Lanka) and Canterbury Golf Villas (Best Housing Development – Sri Lanka), and Kelsey Developments PLC’s Central Park Ja-Ela (Best Housing Architectural Design). 

Local demand for luxury spaces and condominiums have grown during the Covid era, with Sri Lankans making up for 70 to 80 percent of purchases, non-residential Sri Lankans accounting for 25 percent, and foreigners at five percent. 

Record-breaking prices 

In the 4th quarter of 2021, Lanka Property Web found that the total selling price of houses surged by 22.5 percent and apartments by 17.7 percent, both historic numbers for Sri Lanka.  

Between the fourth quarter of 2021 and 2020, the sector saw a 17.7 percent rise in apartment values and a 24.1 percent hike in selling price for a 3-bedroom unit in Colombo. The surge in prices suggests a growing demand for vertical living in urban locations. 

Land prices in the Northern province rose by 45.1 percent, in the Central by 22.6 percent, and in the South by 19.4 percent compared to the last quarter of 2020. The Western province excluding Colombo dropped by 14.7 percent, but the capital grew by 3.5 percent. 

Economic ties with India 

In January, The Economic Times revealed that Sri Lanka plans to merge with India to further boost its economy. The integration will be focused on eight key sectors, including real estate, tourism, information and communications technology, electricity grid, energy, and refineries. 

“India is the biggest economy in the region and Lanka wants to benefit from the Indian growth story. Lanka can be a springboard for Indian investors in the region. Our idea is to integrate our economy into the Indian economy for a win-win situation,” commented Milinda Moragoda, Sri Lanka’s envoy to India. 

In the aforementioned sectors, tourism will be the biggest contributor to the island nation’s recovery post-Covid, with the expected number of tourists coming in from India.

Push for tourism 

In the first two weeks of 2022, Sri Lanka Tourism Development Authority Director General Dhammika Wijayasinghe said 31,600 tourists from India, Russia, and Ukraine visited Sri Lanka, with the average length of stay increasing by twofold, reported EconomyNext. 

“Before, the average stay of the tourist in the country was about four to five days, but now travellers are staying for about 10-14 days in the country due to wellness programmes,” explained the director general. 

Other than the wellness programme, the country is also looking to advertise as a wedding destination. 

“We have already made a name as a wedding destination in many markets such as European, Asian and even the middle east,” said Kimarli Fernando, chairperson of Sri Lanka Tourism Development. 

“We, as an industry, need to work together to build relationships with our peers perhaps in India, Nepal, Maldives, and Pakistan, and promote weddings.” 

Before the Covid period, the island nation has been chosen time and time again by tourists as their location for their destination wedding, with young Western couples throwing modest weddings and parents of Indian couples organising huge parties. 

“We will provide the event management companies, wedding planners, photographers and, so that anybody could look at it and reach out to the relevant businesses. 

Sri Lanka is everything that Asia has to offer,” concluded Fernando. 

Know of outstanding residential, commercial, or industrial projects in Sri Lanka? Nominate them for the 4th annual PropertyGuru Asia Property Awards (Sri Lanka) on or before 22 July 2022. To know more, visit asiapropertyawards.com/award/srilanka/. 

Gynen Kyra Toriano, Digital Content Manager at PropertyGuru, wrote this article. For more information, email: [email protected].