GROWTH IN DEMAND FOR LUXURY PROPERTIES IN COLOMBO
Growth in Demand for Luxury Properties in Colombo
For the past few years, there has been general speculation among local real estate developers that the demand for properties within the Colombo region is falling due to a lack of interest from local buyers. This is mainly attributed to the rapid rise in house prices that seems to be prevailing in the country. However, the recently concluded Third Lamudi Real Estate Expo indicated that demand is far from waning. The Expo showed that house hunters’ interest in properties in the Colombo metropolitan region, especially for luxury real estate is higher than ever before. Yet, is this a one off boost for properties or does this trend form part of a larger growing trend towards acquiring properties from the country’s commercial capital? What does the data show?
A number of prominent local and international companies, such as Jones Lang LaSalle (JLL), Real-Estate Intelligence Unit (RIU), and Lamudi Sri Lanka have conducted research, in-house market analyses, surveys, and trend analyses to assess the health of the local real-estate industry in the country’s commercial capital. The results of these studies have shown clear growth in the acquisition of high-end residential properties, particularly apartments and condominiums built in and around the heart of Colombo.
According to results from Lamudi’s real estate expo and a recent market report by Lamudi, the main factors that are contributing to the rising demand towards the luxury property segment in the country include the constant growth in the economy of the country, escalating the purchasing power of individual investors. As the country is gradually exposed to the latest technological advancements and as internet penetration increases (27% of the country’s 22 million population), incredible job opportunities are becoming available. Such jobs are mainly located within the capital’s city centre, leading to a rise in employment. Reports generated by Trading Economics show that the country is indicating a growth in its employment rates from 95.50 percent (third quarter of 2016) to 95.80 percent (fourth quarter of 2016).
Vertical living in Colombo
Convenience along with higher standards of living are two key factors that property hunters look for as their purchasing power increases. Investors, businessmen, and other interested parties are continuously looking to obtain advanced living facilities close to hand which can enable them to enjoy a modern lifestyle effortlessly. This is the main reason why Colombo is currently moving towards vertical living. Catering to these increasing advanced needs within the city, many new developments are coming up. This once again confirms that luxury living in Colombo will only elevate further with the country’s continued economic development.
Factors that contribute to the increasing demand towards the luxury segment
Growth in the economy
It is evident that growth in the property market is highly dependent on the fluctuations of the economic situation in a country. Once the 30-year war ended, the country experienced a massive development in terms of its economy and many who moved abroad during the fighting showed a keen interest in returning back to their country once the peace was declared Sri Lanka is also recognized as an island worth visiting by travel enthusiasts from across the globe. The post-war period is serving as a fantastic opportunity for tourists to visit and explore the country, discovering many investment opportunities. Giving rise to the growth in the private sector, the country thus far has witnessed a massive increase in demand in the luxury property segment with many investors local and foreign coming into the city to settle down and do business.
Positive government policies
In addition to the remarkable growth in the country’s economy, one main factor that has boosted growth in the luxury segment in Colombo is the recently introduced 2017 pro-competition budget that is facilitating growth in investment. With newly relaxed real estate regulations, foreigners are now allowed to buy apartments from the first residential floor upwards. Buyers who purchase properties above $300,000 have also been given the opportunity to apply for a 5-year residency visa.
Improvements in infrastructure and advanced transportation links
Large infrastructure development projects such as the Colombo International Financial City and the Western Region Megapolis Planning Project (WRMPP) are expected to create thousands of high-end apartments by the year 2030.
The construction of advanced flyovers in Colombo to reduce its traffic congestion as well as proposed plans to build a modern Rapid Transit System (RTS) and a modernized bus service are among the projects that are now underway.
Property interests of Sri Lankan expatriates
This is by far the main reason for the growth of Colombo’s luxury property market. According to RIU, Sri Lankan expatriates who are employed in foreign countries in the Middle East buy at least 30 percent of all luxury properties sold in the Colombo region.