Sri Lanka’s commercial occupancy surges above 70%
The Morning: Sri Lanka’s commercial occupancy has risen above 70% by the end of July, signalling stronger demand as Colombo land prices have surged over 11% in the first half of the year, Capital Alliance Limited (CAL) said.
According to CAL, most properties now have over 70% commercial occupancy with flexible pricing as deflation increases the purchasing power of people.
Properties such as the East Tower at Seylan Towers by Seylan Developments and HQ Colombo by Lanka Realty Investments have 100% commercial occupancy.
For investors, CAL said this typically means pricing power, where higher occupancy supports stronger rental adjustments and operational efficiency, where a larger tenant base reduces per-unit costs.
Also, CAL said that full buildings and rent growth drive better returns to investors.
Other commercial properties that have seen a drastic increase in occupancy in the one-year up to July include Mireka Towers and Havelock City Mall, which have seen their occupancy increase from 30% and 58% to 95% and 94% respectively.
Moreover, the Central Bank said its Land Valuation Indicator (LVI) for the Colombo district rose 11.4% in the first half of 2025 year-on-year (y-o-y), compared with 6.9% y-o-y growth in the first half of 2024.
The index increased 8.3% from six months earlier, up from a semi-annual growth of 2.9% in the second half of 2024.
In annual terms, residential land values rose 14.4% from a year earlier, commercial land values increased 11.5%, and industrial land values rose 8.4%. In 1H24, annual growth rates were 8.5% for residential, 8.5% for commercials and 3.7% for industrials.
OSL take:
The growth in Sri Lanka’s commercial occupancy clearly indicates the country’s ongoing economic expansion as well as future growth prospects. While Sri Lanka has become an emerging business destination in the region, the country is also on the path to becoming a hub in the South Asian region. The country’s strategic positioning in the Indian Ocean and the strong trade ties enjoyed with many foreign countries have also helped boost Sri Lanka’s image as a destination for foreign businesses/investors to explore. Given the increasing business potential in Sri Lanka and the increased attention by foreign businesses/investors on the lookout for lucrative ventures in the country, the increasing land values indicate that foreign businesses/investors could also look at investing money in a sector that ensures quick returns on investment.
| Article Code : | VBS/AT/20250911/Z_4 |