Courtesy Lamudi Lanka
NEW WAVES AND BUBBLES IN REALTY
The trends shaping Sri Lanka’s property market in 2018 and their impact on the national economy
In analysing the growth of real estate in Sri Lanka over the years, it is evident that the property market plays a major role in the economic development of the country; it also defines the standard of living to a large degree.
Additionally, the sector also generates numerous opportunities primarily in the job, tourism and hospitality markets.
Sri Lanka witnessed an economic transformation post-2009 following the end of the civil conflict. This led to higher growth in major industries such as tourism, as well as the infrastructure and property sectors.
The country’s GDP, which stood at around US$ 42 billion in 2009, grew to 68 billion dollars by 2012 and exceeds US$ 80 billion today. Moreover, the contribution made by the construction industry to GDP increased to Rs. 169 billion in the fourth quarter of 2017 from 165 billion rupees in the previous quarter.
At present, real estate buyers in Sri Lanka comprise locals (65%), local expats (27%) and foreigners (8%). This portfolio consists of everyone from pilots to doctors and businesspeople.
However, statistics generated over the years indicate that the real estate sector doesn’t remain stagnant for a long period of time. Therefore, we’re bound to constantly witness the emergence of new trends in the sector.
Some of the major trends spotted last year include an increase in the supply of luxury residential facilities, the rise of Grade A commercial properties and lower interest rates. Real estate experts also observed a bubble forming in the residential sector amid an oversupply of luxury condominiums.
At present, there is a greater focus on mid-range properties, an unprecedented increase in land prices and growth in startups.
Sri Lanka’s evolving real estate landscape may seem hard to keep track of with new trends emerging all the time. Nevertheless, a few interesting trends that have stood out in the local real estate market this year are worthy of analysis.
PORT CITY DEVELOPMENT The CIFC (Port City) project involves a consortium led by the state run China Harbour Engineering Company (CHEC) for a mixed residential and commercial development.
The project is set to introduce a wave of new properties to the commercial capital’s real estate market with the sale of newly serviced development plots to second tier developers. This would also include a mixed use pilot project to highlight the Port City’s master plan to a global audience. The development aims to have all 269 hectares of new land complete by June 2019, according to the Daily News.
NEW INFRASTRUCTURE With the completion of the Rajagiriya flyover, which was constructed with the aim of reducing traffic congestion in Colombo’s suburbs, more infrastructure development endeavours are now in the pipeline particularly for the Western Province.
Therefore, we can expect to witness more public-private partnerships or foreign private development initiatives with public support. The improvements to the country’s infrastructure will also lead to many affordable housing options in the suburbs beyond the commercial capital.
CONDOMINIUM MARKET Sri Lanka’s growing middle class is gradually taking the front seat with the acceleration in demand for condominium properties originating from this emerging segment of property buyers.
Rising land prices in Colombo and its suburbs in particular have resulted in these condominium properties becoming an attractive option.
OLDER APARTMENTS While there may be an oversupply of luxury apartments in the Western Province, there continues to be a high demand for these high end properties because of the facilities they provide – such as increased security, flexible payment options and secure parking, as well as the convenience factor.
This poses a threat to older apartments, and they will be compelled to take effective measures to retain existing tenants and match prices to the level of quality offered by the newer luxury apartment segment.
– Compiled by Andria Ruth