Sri Lanka’s real estate industry performs with tenacity and resilience during past year says RIU
The annual real estate report by the Research Intelligence Unit (RIU) has reportedly shown that the industry had performed with tenacity and resilience during the past year, given the economy’s extraordinary challenges.
The report has concluded that within the next two to three years, Sri Lanka would face an undersupply of apartments and other real estate assets due to a combination of variables which would essentially navigate it towards establishing a sellers’ market, according to a news report in the Daily FT.
According to the news report, an eminent recommendation from the report was that the present time is exceptionally propitious for investment and that in 2020, low-interest rates stimulated the market to enhance the absorption rates of the prevailing stock of apartments in Colombo.
Simultaneously, combined with the diaspora’s interest levels remaining at an all-time high and with airports re-opening, the influx of buyers will be significant and the market is more appealing than ever before to persons earning within the greenback, British pound, and most other currencies due to the weakening rupee, the news report has further noted.
The amalgam of these variables and the novel reality faced by developers, whose costs have spiked due to the new import restrictions and subsequently the overall currency depreciation effect, indicates that developers will be pressurised to supply the following generation apartment projects at prices that tally with the present market and creating the likelihood of an undersupply is substantial.
The annual report was premiered at the RIU webinar titled ‘Resilience to Resurgence’ on the Sri Lankan Real Estate Market, held in January in partnership with the International Chamber of Commerce (ICC) and British Sri Lanka and Maldives Forum for Business and Trade (BSLMFBT).
After an introduction and welcome address by RIU in London Associate Director William Rezel, BSLMFBT Managing Director Dr. Anil D. Priyanka Baddevithana and RIU Head of Real Estate Research Onila Wickramasinghe had presented insights taken from the upcoming RIU Real Estate Market Annual Report 2021.
The presentation had given insights into the country’s prevalent economic conditions, investment potential in property development, fluctuations in real estate market pricing, investment potential in property development, and absorption or occupancy rates.
The point of focus in the RIU market update had been luxury and semi-luxury (tier 1 and 2) residential apartment properties, grade A and B commercial properties with an overview also on the retail mall market and bare land market in Colombo.
According to its respective areas based on location and price, RIU had segregated prime and non-prime residential locations according to its respective areas. Colombo prime locations such as Colombo-1, 2, 3 and 7 fetched the highest prices in Colombo. In 2020, Luxury (tier 1) and semi Luxury (tier 2) prices remained unchanged. However, in the tier 3 market, we witnessed developers and sellers offering discounts of up to 15%.
The interest in property among buyers had shown a growth in 2020 Q3 and Q4.
Sri Lanka’s real estate sector is on a growth path along with the expansion of economic activities in the sector. The country’s real estate sector started to expand with Sri Lanka becoming a business hub in the South Asian region given its geographical positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed by the country. Therefore Sri Lanka’s real estate sector poses a lucrative business/investment opportunity.
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