Sri Lanka’s property sector sees opening as Investors seek safer ground
The Morning: Sri Lanka has an opportunity to position itself as an emerging real estate investment destination, but industry stakeholders say the country must address policy inconsistency, weak promotion, regulatory delays and investor uncertainty if it is to convert interest into capital inflows.
This discussion took place at ‘Driving Growth Through Real Estate: 10 Year Plan, Session 1’, a high-level forum organised by RIUNIT at the Colombo Port City Sales Gallery on 5 May, bringing together property developers, investors, policymakers and industry professionals to discuss the future of Sri Lanka’s real estate sector.
Prime Group Co-Founder and Group Chairperson Premalal Brahmanage said Sri Lanka’s sovereign rating upgrade from default status was a positive signal for a country recovering from an economic crisis, although its CCC+ rating was still below investment grade. He said absorption rates remained high, while property valuations had increased by around 10% year-on-year.
Brahmanage said capital repatriation remained important, as investors wanted confidence that their funds were safe. He also said rental yields at Port City were expected to reach around 20%, while the investor visa, or golden visa, was a strong tool that had not been promoted adequately.
“Sri Lanka can become the next real estate hotspot,” he noted, adding that the country first needed to promote Sri Lanka before promoting individual projects.
Panelists said global geopolitical changes had created space for Sri Lanka, especially as investors reconsider traditional safe-haven destinations such as Dubai. However, they stressed that the country needed stronger infrastructure, world-class real estate, clear lifestyle offerings and better market transparency.
ICC Managing Director Namal Pieris said investors looked at returns, but returns were always linked to risk. He said Sri Lanka had advantages in location, weather and hospitality, but investors would also assess the country’s IMF programme, sovereign rating, macroeconomic stability, exchange rate pressure, political stability and debt sustainability.
Speakers also noted that higher fuel, material and logistics costs had placed the sector at a disadvantage. Home Lands Group Executive Director Amaya Herath said lands closer to the airport and port were seeing stronger demand.
Capital TRUST Properties Chairperson and CEO Minoli Wickramasinghe said regulation remained a deterrent, while inconsistent policy had weakened investor confidence. She said Port City should focus on A-grade office spaces, but investors needed clarity on taxation, timelines and policy direction.
Panelists warned that Sri Lanka had moved too slowly to open up visa policies and attract investors looking for alternatives. They said Port City, as a special economic zone, needed transparency, stable rules and limited political interference if it was to attract serious long-term investment.
OSL take:
Sri Lanka is entering a renewed phase of investor confidence as macroeconomic stability gradually improves following its recent financial crisis. A key turning point has been the sovereign rating upgrade from default status, which has helped restore credibility in international markets and signaled progress in debt restructuring and fiscal stabilisation. For foreign businesses/investors, this shift is particularly important as it reduces perceived country risk and opens the door to renewed capital inflows. One of the most promising areas of opportunity is real estate. With prices in several segments still below regional benchmarks, Sri Lanka’s property sector offers attractive entry points for long-term businesses/investors seeking capital appreciation and yield potential. Urban redevelopment projects, tourism-linked developments, and mixed-use commercial spaces are gaining traction as demand slowly rebounds alongside economic recovery. Beyond real estate, broader investment opportunities are emerging in infrastructure, renewable energy, logistics, and export-oriented manufacturing. Strategic geographic positioning along major shipping routes gives Sri Lanka an inherent advantage as a regional trade and logistics hub. As reforms continue and investor protections strengthen, foreign businesses/investors are increasingly viewing the country not just as a recovery story, but as an emerging frontier market with early-mover advantages.
| Article Code : | VBS/AT/20260511/Z_1 |