Dec 22, 2015 (LBO) – Sri Lanka’s Western Province ‘Megapolis’ plan will boost land prices in the suburbs and beyond in the long term, a research report said.
“With the change in political power in 2015, we can now note that there is a further discussion about planning beyond Colombo to cover a Western Province ‘Megapolis’ under a dedicated Ministry,” the real-estate quarterly report – 2015 produced by the Research Intelligence Unit (RIU) said.
“Therefore, in the long term, land prices in the suburbs and beyond will receive a boost from receiving the benefits of better planning in a similar way to the impact of recent city ‘beautification’ on Colombo central land prices.” the report said.
According to RIU’s baseline property prices from 2012, the highest annual land price growth rates were experienced in Colombo 03 and 04 whilst Colombo 01 has remained the most expensive.
“In our forecast for the next three years, RIU expects the land prices in Colombo to continue along the same trend in an environment of land scarcity amidst rapid (vertical) development,” the report said.
“In the land sales market, there will be no significant difference between the price of lands used for residential and commercial purposes.”
Meanwhile, the report also said that Sri Lanka’s price data on land sale registrations and advertised rates reflect several driving factors.
“A defining characteristic of central Colombo (1,2,3,4,5 and 7) is the scarcity of private land sale registrations. This reflects the widespread level of state presence in this area as well as the high number of illegal dwellings.”
According to the report the few private property transactions that were recorded at the land registry, the per-perch prices show tremendous variation from as low as one million rupees up to 14 million rupees.
“This is due not only to the socio-economic factors but also as a consequence of various legal and regulatory issues that impact prices; for example, building permits are only granted to lands of over six perches and as a result smaller plots are much cheaper,”
Perceptions also impact prices, the report said.
Traditionally, lands closer to Galle Road are more expensive than lands closer to the beach due to the perception of higher crime rates along the railway line that runs parallel to the beach.
However, with the ongoing initiatives led by the Urban Development Authority (UDA) to beautify Colombo, these patterns area changing, the report said.
Apart from making Colombo more attractive, the UDA’s policy is to give out state owned lands to investors, both foreign and local on long leases.