Sri Lanka’s real estate growth slowed by interest rates, inflation: report

June 20, 2012 (LBO) – Growth in Sri Lanka’s real estate sector may slow in the coming months, as rising interest rates and higher construction costs begins to bite, a new report has forecasted. Sri Lanka is in the midst of a post-war property boom, with key real estate drivers centered around the leisure and ports and aviation development in the southern district of Hambantota.

During the first quarter of this year, a number of real estate developments came on stream, mainly related to the leisure industry, KPMG Sri Lanka, a financial advisor, said in its latest real estate market brief.

International chains have joined local leisure operators to start work on building numerous hotels, while some boutique hotel properties completed construction work during the first quarter.

However, KPMG tips caution, as rising interest rates and inflation could dampen real estate activity.

“The recent increases in interest rates and the likely consequences of inflation as a result of price increases of a number of essentials, are likely to have both demand-side and supply-side implications for the real estate sector,” the 10-page report said.

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