Land prices in Sri Lanka, especially Colombo suburbs surge 20%
The Morning: Colombo District’s suburbs recorded an average 20% jump in land prices, with Piliyandala up 16%, and Athurugiriya and Homagama both rising 14%.
In contrast, Colombo 1-15 saw a more moderate 7% increase. Beachfront properties in southern coastal areas are also in high demand, with average asking prices reaching Rs. 2 million per perch, driven by tourism and foreign buyer interest.
Sri Lanka’s real estate market is showing signs of recovery in 2025, supported by economic stabilisation and lower interest rates.
According to the latest ‘Real Estate Market Outlook Report 2025’ by LankaPropertyWeb (LPW), land prices in the Western Province have risen by an average of 12% year-on-year, with suburban areas seeing the sharpest increases.
The residential apartment market is stabilising after years of volatility. Urban apartment prices increased between 0.2% and 2.8%, while suburban areas saw rises of up to 2.9%.
Rental prices remain steady, particularly in high-end segments, reflecting sustained demand. With 37,000 existing units and 8,200 more expected by 2027, supply remains strong, especially for three-bedroom apartments. Overseas buyers account for 27.7% of search traffic, indicating continued foreign interest.
Suburban housing demand is growing, with Malabe, Homagama, and Athurugiriya attracting buyers due to improved infrastructure and lower prices.
Residential properties in Colombo 1-15 start at Rs. 60 million, while suburban homes begin around Rs. 20 million. Rental yields average 3.5%, with monthly rents typically above Rs. 25,000.
Lower borrowing costs are supporting the market. After a 7.75% cut to the Central Bank’s policy rate, home loans now average around 10%, making property more accessible for middle-income buyers.
LankaPropertyWeb Managing Director Daham Gunaratna noted that 25 new developments launched in the past year, adding over 2,500 units, while delayed projects from 2020-2023 have delivered 3,600 apartments.
OSL take:
The continuously rising land prices in Sri Lanka, especially in the commercial capital Colombo and its suburbs, clearly indicate the stabilising apartment market and improving financial situation in the country. In other words, Sri Lanka’s real estate sector is entering a phase of optimism and long-term growth. With Sri Lanka working towards becoming a hub in the South Asian region supported by the country’s geographical positioning in the Indian Ocean, strong trade ties with many foreign countries and the continuously improving ease of doing business environment in the country, Sri Lanka is undoubtedly poised for steady growth. The expanding real estate sector in Sri Lanka has therefore opened a host of business/investment opportunities in the country that also cover the house and property sector. The increasing business potential in Sri Lanka’s real estate sector presents many business/investment opportunities for foreign businesses/investors on the lookout for lucrative ventures in the South Asian region as a gateway to the rest of the Asian region. Also, since Sri Lanka has many businesses in the real estate sector showing positive growth, foreign businesses/investors could also look at forming partnerships or joint ventures with these businesses to further expand operations locally and regionally.
| Article Code : | VBS/AT/20250804/Z_6 |